First off, I want to thank everyone who took the time to reply to our survey! Your feedback is extremely valuable!
Here are the results and how they're helping to shape our direction.
What goals would you like to see us accomplish? What's most important to you in how this Quadriga situation ends?
This was a very open ended question and the answers varied widely (and there was definitely a lot of responses which mentioned multiple goals). Here's a summary:
- 65% of respondents mentioned recovering losses for affected users.
- 45% of respondents described a desire to get better standards on Canadian exchanges.
- 30% had a justice-related tone to them and saw this as part of their most important outcome.
- 25% mentioned education on exchanges or crypto-asset protection.
- 20% specifically mentioned the creation of the new exchange as important.
The justice theme is one goal which has been entirely overlooked by what we're doing. Discussing the idea on the Quadriga Uncovered Telegram group, it was determined that there was strong interest in a potential letter-writing initiative, and we are going through various alternatives to bring this to fruition. One possibility would be sending letters to the RCMP to request the exhumation to occur.
Is there any part of our initiative which confuses you?
There was one response that indicated confusion, one that didn't appear to answer the question, and all others indicated understanding, which is awesome.
Some suggestions and points of clarity:
- One response mentioned that "[t]he website landing page could provide an executive summary of the key aspects of the initiative". We are constantly experimenting and improving the front of the website and our presentation of ideas. The front page in particular was updated relatively recently, and we welcome all concrete suggestions for improvement. If anyone wants to step up to help improve the information that would be awesome!
- A very valid point in "I was worried with the proposal to have a token for affected users. The intention may be ok, but tokens and ICOs have a bad reputation for being scams." This is very true that the many blockchain and crypto projects take advantage of the irreversible nature of the blockchain for fraudulent and criminal activity, typically demanding an upfront payment in order to gain a promised future return which is ultimately not delivered. Good examples are the illegal ICOs, or the wide variety of ponzi schemes. What we are doing is very fundamentally different. Here's how we compare:
- Tokens are distributed for free. There is no payment or purchase required from affected users for their initial tokens (and thus no upfront investment or downside risk).
- Tokens have no cash value and are only redeemable for utility (products/services) or goodwill (best-effort redemption) and it's always a fixed value of $1.
- There are no tokens distributed to developers or pre-mined. They're all 100% against verified losses - what we believe are real losses of affected users. The minting process is planned to be transparent and multi-sig with our partner exchange so we can each hold the other accountable, potentially through a smart contract. When and if we run out of tokens (aka recover is completed), then we can do this same system to help other fraud cases.
- From a legal standpoint, it can be thought of similar to Air Miles or Canadian Tire Money - where it's a promotional/loyalty mechanism for businesses, but also has a philanthropic side because businesses are helping out fraud victims. Businesses (creators of value in our economy) can all help with the recovery, and as more businesses come on board, we will open it up as a community competition (leaderboard) where businesses that do the most redemption will ultimately get the best publicity for themselves. It initially starts with the partner exchange, then a few crypto-friendly service businesses, and expands from there.
- The only way to get tokens is to either be an affected user of Quadriga (with a proven loss) or to support our recovery by purchasing them from affected users (at a discount set by the market, and possibly with an additional fee that also goes to help victims). We are constantly exploring ways to better target the response to victims while still having an effective recovery/community engagement system so more members can join over time.
- One response was curious about "the association between the Initiative and the official committee." Aside from being victims ourselves and in the past getting feedback from some Official Committee members, we are entirely separate from the bankruptcy process. What we are proposing is far too complicated, novel, and entrepreneurial to be run within the context of a traditional bankruptcy. While making an initial donation to the estate is not out of the question, Miller Thompson has stated they're not even able to process any sort of profit share, and any donated funds would be decreased by the superintendent's levy and all professional fees. In addition, much of creating a meaningful recovery will depend on a feedback loop where businesses ultimately benefit from joining the recovery. (It has to work for the participating businesses as an effective promotion, so they keep wanting to participate.) Our token recovery project has a separate signup, which is 100% free and has no impact on bankruptcy claims.
- One response was "[c]onfused about progress and value offer to crypto enthusiasts." The initial (very first) value proposition for the tokens will be the ability to offset trading fees on the partner exchange, where we expect that traders may adopt having a small stash to cover their trading expenses as they trade. (Including a proposal to accept trading fees 100% payable in tokens for the first month.) We also have proposals with several businesses in the works, which will develop as a next stage, where they will accept a % of payment in tokens. And finally there is the best-effort redemption which works similar to the Bitfinex token recovery. In terms of progress, here's what stands in the way of launch:
- Our partner exchange needs to complete their full launch. They are presently only launched as a non-custodial crypto-swap service. Bringing banking online is a challenge with difficult to foresee timelines, however this is still ongoing.
- We are waiting for the first bankruptcy payout to complete, so we can have more tools for validation of losses and reduce the risk for misuse of any claim information. Given cases like CoinMama, CoinSquare, and countless other privacy breaches, it's better to wait, no matter how certain we are of the privacy measures and systems in place. We continue to encourage anyone signing up for the pre-claim or mailing list to use an email address which does not identify themselves - it's not worth the risk.
- We need to hit the initial sign-up goal. This is a requirement for our deal with the partner exchange and key to our voice in negotiations with businesses. A lot depends on the size and engagement of our community here, and for many businesses this is their number one factor in the participation decision. We have a lot more power as a group.
We want to thank everyone for their feedback here! If there are further questions or confusions, asking on Telegram or on Reddit here are great tools to help get answers.
Is it more important to you that we focus on (a) helping victims of Quadriga recover, (b) educating more people about Quadriga and other exchange fraud, or (c) preventing future exchange fraud events like Quadriga?
Some respondents chose one choice, while others ranked multiple. Of the first or only choice picked, 70% chose (a) helping victims of Quadriga recover, while 30% chose (c) preventing future exchange fraud events like Quadriga.
(a) was mentioned in 80% of cases, and top choice in 70%.
(b) was a second choice in 30% of cases and mentioned in 35%.
(c) was mentioned in 65% of responses and top choice in 30%.
It's very clear from this that the educational portion of our initiative is seen as the lowest value. On this standpoint (and also considering the answers to the first question), we are floating the idea of replacing the Education goal with a separate Justice goal, which is composed of letter-writing and other advocacy to help speed up any potential criminal investigations.
What bothers you most about Canadian cryptocurrency exchanges?
The responses varied widely. Here's a selection of the most notable responses:
- "The lack of unbiased information on how trustworthy exchanges are."
- "The lack of transparency."
- "that they are unregulated"
- "I only use a non-custodial exchange now (Bull Bitcoin). The inertia and apathy of the government bothers me a lot. After Quadriga there should have been an inquiry. Even my emails to MPs Marie-France Lalonde and Bill Blair got no response. It's not realistic to wait for exchanges to 'self-regulate'."
- "Terrible for trading and unreliable"
- "Where is the regulation and oversight?"
- "It's difficult to know which one is safe and w[h]ich one is not. It's easier to go to a bigger exchange (eg. Binance, Kraken, ... ) who has a solid reputation than Canadian one (at least for now)"
- "Small"
- "Slow volume, difficulty to access for some, security"
- "Security, trust, support, education"
These are a good summary of the longer and more comprehensive survey we previously did on Canadian exchanges last year. Many of the themes are identical.
Should preventing events like Quadriga focus more on regulatory reform (working with regulators) or trying to create change through setting the example on one exchange and go from there (similar to how "Tesla" has electrified vehicles)?
There was one response which desired us to build a separate/independent classification system for exchanges. For other responses:
- 40% of respondents desired an approach which included both aspects.
- 40% of respondents desired an approach of setting an example in one exchange.
- 20% preferred a regulatory approach.
Considering all the responses, pressing forward on both fronts appears to make the most sense. No responses mentioned an objection to either angle or approach.
In terms of classification systems for exchanges, there are a few services out there. Key issues are that these opinions can be influenced by referral bonuses, the exchange reputations change over time (as was the case in Quadriga), and there is a real lack of transparent information on which to base the evaluation. There have been countless examples where reputable third parties have recommended shady services that subsequently failed. For most investors, the only reliable sign is the withdrawal time, and when withdrawals stop, it's already too late.
Would you rather have the recovery run inside of a for-profit exchange (sort of a marketing/promotion idea to push people onto a safer exchange) or as an independent group of affected users pushing for our own interests (working with the safer exchange and other businesses potentially similar to a labour union or political advocacy)?
This is one question which flopped back and forth as responses came in. However, the end result was pretty clear:
- The majority (55%) prefer to have the independent group advocating for affected users.
- A minority (35%) prefer to have it run in a for-profit/promotional way inside the exchange.
- There were 10% of responses indicating both would be acceptable, or no clear preference.
Given this feedback, we will be working to run this independently, however working closely with our partner exchange as a joint project (and it is definitely a promotional tool for them).
If given the choice, would you prefer (a) $20 cash each year for 10 years (slower recovery with full choice), or (b) your choice of $200 worth of discounts on products/services that are donated by small businesses which you could use this year (faster recovery with less choices)?
60% indicated a preference for (b), and 40% had the preference for (a). There is clear interest in focusing on both, and ultimately that will push the fastest and most flexible recovery.
Affected users have a liquidation option which allows non-victims to purchase their tokens on the exchange. How do you feel about charging non-victims a small fee (5 cents per token) that is split between funding the project and a pool for affected user payout?
Overall, half of respondents like this idea (50%) with generally a short response. There were two objections - one to the token concept as a focus and the other to make sure that the service provided justify the cost to the purchaser. All others appeared indifferent or asked questions. Below are more detailed responses and comments:
- "indifferent, although I think any fee will end up factoring in to the exchange rate on the value of the token. If people are willing to pay $10 for a $15 coupon, then a 5% fee might mean they'll only pay $9.50"
- This is undoubtedly going to be true. In your example, 25 cents would be used for the project, 25 cents for affected users, and $9.50 would go to the seller. As opposed to $10 going to the seller without the fee. There is no expectation that additional funds would be raised.
- "I am not yet clear on the cost structure of the proposed solution. Has the cost of managing the recovery effort been accounted for?"
- This is exactly the problem which is intended to be solved through this proposal.
- "I think that it is more important to have broad communication, reaching out to public at large and crypto communities in other countries. Then there should be multiple ways for different communities to contribute financially to affected users. I don't like the idea of fees and tokens because it seems to distract from the larger tasks of communication, rallying, documenting and advocating."
- You bring up great points. Those are all important! Ultimately, the recovery is one aspect of what we aim to achieve, and our direction is shaped by feedback including yours.
- "Good idea, but it restricts the on boarding of new users"
- This is a fair point. One should carefully consider who is no longer on-boarding on this basis and their impact on the recovery.
- "I would prefer to avoid this option, Unless we can show that there are many added benefits from using this platform over others, thus justifying the fees and making it more acceptable to users."
- Absolutely. The exchange needs to be better than any other, and any deals available through the project need to be better than those elsewhere. If we aren't achieving this, then there is really no point and no recovery.
- "I think it a good idea, fees will go anyway to affected users, I totally agree"
- "better not tax when tokens are transferred to the blockchain - tax the transaction (something small, in order not to affect the volume/liquidity too much) like what they are doing with the flight tickets in Quebec"
- Absolutely! This would be a transaction cost and not to withdraw the tokens to the blockchain.
In summary, there appears to be relatively strong support for this idea. At the moment it has not yet been agreed upon by the partner exchange.
Have you discussed the project with anyone else who lost funds in Quadriga? What kind of feedback are you hearing?
40% said yes they've discussed it. 40% have not. 20% didn't answer (or it was hard to understand). Here are some of the more detailed responses:
- "only online, and there there seems to be some confusion about the projects goals, some concerns about the connection to a for-profit exchange, and a general 'one bitten twice shy' mentality."
- "Yes, Matt and my spouse. The problem was foreseeable. We just all ignored the risk because we were sold on the simplicity. The first red flag I saw was that accounts could be reloaded through an entity in China, which did not make sense, but I ignored it because of my perceived impression of protection given that the operator was in Canada."
- "Yes - most have given up hope of recovering funds"
- " I can't follow the chats on Telegram. I gained no knowledge the times I tried to read the discussions there. In fact the discussions there seemed to be not very polite. I wasn't able to connect with any other affected user. I wish there were some more structured gathering. Maybe a webinar would be nice."
- Note: This sounds like it may be talking about the separate and more popular Quadriga Uncovered Telegram group. I'm not aware of any impolite discussions on our Telegram group. As far as I am aware all of our present members are friendly people.
- "This recovery process started out fine, but has turned into a circus show as is usual with lawyers who naturally want to stretch cases out to steal more money from victims."
- "Not for now, I don't know any other victim (except members of Quadriga initiative)"
- "Its your fault for keeping it on an exchange, what did you think was going to happen. There will be no money left after the 'bankruptcy'.. Lightning will solve all these problems other than recovery of funds."
Many affected users have strong privacy concerns and shame regarding what happened to them, such that they are even hesitant to share basic details. What do you feel is the best way to build trust and openness among the affected user community?
Here are some of the replies:
- "I really don't know. Keeping things as anonymous as possible might help, but then the project would also need accountability to show that most of the tokens weren't sent to your own account. It's a tricky problem."
- Absolutely. People will undoubtedly attempt to defraud our project if we achieve any reasonable measure of success. The plan at the moment is to process the claims inside the secure exchange environment after the first bankruptcy payout is complete, and to discard the claim information subsequently (other than what we need to prevent double claims). Once the tokens are released, they're just a number and over time will deviate from any actual losses.
- "What you are doing now. I am just not clear on the sustainab[i]lility of this effort without appropriate financial support."
- This has been a concern multiple times and is an unanswered question. The costs as of yet are mostly a lot of time.
- "We all lost. We got burned. No shame in getting burned. It happens."
- "There must be a way for affected users to connect to each other. Communication is the foundation, and it can be done preserving privacy. Some ideas include a webinar, chat tools that preserve privacy, etc. I heard of the documentary but I don't know what will be there. I think it is important also for the public at large to know how Quadriga affected users. That is, it's important for some personal stories to be published, ideally in the mainstream press."
- We have Telegram, Reddit, and Twitter. A webinar would be great! There have been a number of mainstream news articles on Quadriga, although it's not well known outside of the crypto community. We welcome any further ideas for platforms.
- "I would use the angle that crypto will continue to gain traction as time goes on, and that although the affected users were victims of a terrible fraud, we have an opportunity to prevent this from happening to others. I would also use the fact that this initiative has gained a considerable following and that affected users are all in this together, whether we want it or not."
- "Maybe a guarantee that nobody will be further persecuted would help."
- Hopefully no affected users are persecuted. If you have any ideas for how to establish any such guarantee it would be great to hear them.
- "I don't know what else could be done for now."
- "Just let us go forward."
- "Once you demonstrate positive effects (and communicating about them), and set up ways to contact you securely, the users who have privacy concerns will contact you. You should have anonymous way to communicate with you (maybe using memo.cash?)"
- I believe that anyone can communicate using an alias (and/or Tor) with any of our communication methods. None of them require you to identify yourself.
- "Simple questions, good job :). Wonder about the stages of loss/gr[ie]f. Maybe the stinging pain needs to subside before people will trust."
Notes: All percentages have been rounded to the nearest 5%. One response was omitted which did not attempt to answer the questions.
Thank you very much for everyone who took the time to respond to the survey! We greatly appreciate all your feedback and will continue to study these answers as we move forward!
