Ernst & Young, the bankruptcy trustee for failed Canadian crypto exchange Quadriga, filed its fifth report of the trustee with the Ontario Superior Court of Justice on Jan. 22.

The purpose of the 79-page document was to submit the accounts of the trustee and its counsel with regard to activities involving various law enforcement officials, regulatory agencies and tax authorities. In its report, EY collectively refers these activities as “law enforcement.” 

In August 2019, EY told the court that it was getting overwhelmed with requests for material from law enforcement agencies and regulators. Collecting and producing the information is hard work and lawyers don’t come cheap. A court order on Sept. 17, 2019, solved that, giving EY the green light to continue cooperating with investigators.

EY worked with its general bankruptcy lawyer Stikeman Elliott to facilitate its cooperation with law enforcement. It also brought onboard Toronto law firm Lenczner Slaght Royce Smith Griffin for extra help in producing documents.

The volume of documents was huge, so EY put everything into a central “EDiscovery” database. At present, the database contains about 750,000 individual documents, it said.

The grand total for six months of responding to investigator inquiries came to CAD $637,156 ($484,000 USD). The costs were broken down as follows:

• EY’s fees in connection with law enforcement activities for the period June 24, 2019, to Dec. 31, 2019, came to CAD $188,939.
• Stikeman Elliott’s fees in connection with law enforcement activities for the period June 16, 2019, to Dec. 31, 2019, came to $133,618.
• Lenczner Slaght’s fees in connection with law enforcement activities for the period June 25, 2019, to Dec. 31, 2019, totaled CAD $314,599.

EY said that it made “various efforts” to minimize costs and streamline the accumulation, review, and production of documents. However, it said, given the volume of documents and the time and effort required, the cost was still significant. The rest of the lengthy report spells out how the expenses were accrued.

(To learn more about the Quadriga scandal, read my full updated timeline.) 

Photo: iStock