Law firm Stewart McKelvey had a conflict of interest because it represented both QuadrigaCX and Jennifer Robertson, the widow of the failed cryptocurrency exchange's founder Gerald Cotten.

That's according to a letter sent to creditors Wednesday from Miller Thomson, one of two law firms appointed as representative counsel for Quadriga customers by the Nova Scotia Supreme Court.

Stewart McKelvey withdrew from representing Quadriga in the creditor protection proceedings on March 13, citing a "potential conflict" raised by other parties. The firm said at the time it did not know what the conflict was.

But according to the Miller Thomson letter, shared on Telegram and confirmed as genuine by an attorney with the firm, both the representative counsel and the exchange's court-appointed monitor Ernst & Young (EY) had issues with Stewart McKelvey representing both Quadriga and Robertson (who is also acting as the executor of her late husband's estate).

According to the document:

Stewart McKelvey's attorneys "eventually acknowledged the conflict," the communication added, and while it initially intended to create a proposal to address this conflict, the firm informed both Miller Thomson, Cox & Palmer (the other law firm appointed as representative counsel) and EY that it would be withdrawing as counsel for Quadriga "after repeated follow-ups."

The law firm will continue to represent Robertson personally in the ongoing matter.

Miller Thomson, Cox & Palmer, Nova Scotia Supreme Court Justice Michael Wood, Stewart McKelvey, EY and Peter Wedlake (the court-appointed chief restructuring officer for Quadriga) held a conference call to determine the next steps on March 18.

According to the Miller Thomson communication, "the parties expect to be back in Court to address the next steps in these [Companies' Creditors Arrangement Act] proceedings as early as next week."

Neither a transcript nor a recording of this call was immediately available. Stewart McKelvey and EY did not immediately respond to requests for comment.

Stewart McKelvey initially filed for creditor protection on QuadrigaCX's behalf at the end of January, when the exchange revealed that it could not access nearly $136 million in cryptocurrencies said to be held in cold storage wallets (though there is doubt that these holdings actually exist).

The law firm has since represented Quadriga in a number of hearings before the court until its withdrawal earlier this month.

Stewart McKelvey partner Maurice Chiasson image via Nova Scotia Supreme Court