Canada Revenue Agency Audits QuadrigaCX’s Corporate Tax Returns

The Canadian exchange has been generating headlines ever since its CEO, Gerald Cotten, was declared dead in India without ever revealing the passwords to access the company’s cryptocurrency reserves.

The Canada Revenue Agency (CRA), the country’s tax authority, is auditing the corporate tax returns filed by QuadrigaCX, the now-defunct Canadian cryptocurrency exchange.

CRA’s request for documents and information is significant

According to an article by the Globe and Mail on Sept. 16, QuadrigaCX is now being audited by the CRA which has requested the tax returns from Oct. 1, 2015, to Sept. 30, 2018.

Bankruptcy trustee EY, which oversees the exchange’s insolvency proceedings, said that the CRA’s request for documents and information is significant, stating:

“The Trustee intends to discuss the request for information with CRA Audit and their counsel and will return to Court for further direction, if necessary.”

The bankruptcy trustee added that responding to all of the information requests from various law enforcement agencies and regulators will have a direct affect on how much money is available to repay QuadrigaCX’s 115,000 creditors. However, EY admits that there is no legal basis for it to refuse to respond to these requests and adds:

“Accordingly, the Trustee is focused on conducting its document collection, organization, review and production efforts in as cost effective a manner as possible … it is not expected that the Trustee will be in a position to respond to the CRA Audit request at this time.”

Over the past year, the exchange has been engaged in a lengthy court case with the exchange’s creditors, some of whom have speculated wildly as to the fate of the lost cryptocurrency, with some wondering whether Cotten is even dead.

Canada Forges $130,000 Development Deal for Steel-Tracking Blockchain

The Canadian government has awarded enterprise blockchain startup Mavennet a procurement contract for the development of an on-chain steel-tracking platform.

Innovation, Science and Economic Development Canada (ISED), a government agency with the mandate to foster technology innovation, published a procurement award on Nov. 12 that will fund the R&D project for six months with 169,427 CAD(about US$130,000).

The goal, as set out by ISED, is for Mavennet to build a blockchain proof-of-concept prototype that can track and share real-time data across the supply chain in the Canadian steel industry that regularly produces well over 10 million metric tons a year.

Mavennet’s CEO Patrick Mandic said in an interview that with a blockchain to trace live data points and AI to make those patterns meaningful, the system could have ripples across the multi-billion-dollar industry.

“Ultimately, you’re collecting a lot of data with new levels of granularity”, he said. “If you’re able to collect information in real time and in a way that you can trust, you’re opening up a world of possibilities for analysis and providing insights to the government”, Mandic said.

If phase 1 proves successful, Mavennet may unlock additional two-year government funding of up to $800,000 to continue building a deployment-grade system. It’s already pursing similar government contracts around the world, including an oil-tracking platform for the U.S. Department of Homeland Security.

“The adoption of new digital technology into Canadian industry will help ensure our firms strengthen their competitive advantage”, said Hans Parmar, a media relations manager for ISED.

Canada’s steel industry is a major international exporter, especially to the U.S. But that heavy reliance was rocked by President Trump’s 2018 steel tariffs and the ensuing market uncertainty. Last year, exports were down 22 percent.

Mandic said the tariffs provide a context for Canada’s search for a blockchain-based steel supply chain solution. Asserting that Trump’s decision was motivated in part by fears of tariff dodgers, who route their exports through untaxed markets, Mandic said blockchain’s immutability can verify claims of product origin.

“What the blockchain provides is the ability to have a specific set of records in specific points of time”, he said. “You cannot go back in time and change the path.”

ISED’s Parmar refuted the idea that the project was launched in response to the section 232 steel tariffs. But in a statement to CoinDesk he also explained the platform could have blockchain-specific benefits.

“The technology solution may facilitate trade and domestic policy adjustments, including aligning country of origin marking regimes, certification and labelling if implemented”, he said.

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