Cryptopia liquidators seek advice from courts

Liquidators for hacked cryptocurrency exchange Cryptopia need legal advice from the courts as to how to repay out-of-pocket customers as there is no legal precedent anywhere in the world.

The Christchurch-based exchange was hacked in January, with millions of dollars' worth of virtual currency syphoned from its digital wallets.

Liquidators David Ruscoe and Russell Moore from Grant Thornton released their first report today, which said Cryptopia's liabilities totalled $4.2 million.

Its assets total $1.7 million

A court order was obtained this week enabling them to use Bitcoin held by the company to fund the liquidation.

Moore said there was no legal precedent on crypto assets, so the distribution of Cryptopia's assets - and the overall conduct of the liquidation - would require significant direction from the courts.

"As liquidators, we have a responsibility to protect and preserve crypto-asset holdings for the benefit of those entitled to them.

"We are aware of and understand the frustration of Cryptopia's customers."

He said they had also taken steps to secure the company's assets and filed a petition in the Bankruptcy Court in New York to preserve the Cryptopia information stored on servers in the United States.

In 2017, the company claimed to have 30,000 users around the world but according to the report had 2.2 million users at the time of liquidation.

When the hack was discovered in January, Cryptopia closed the exchange for trading.

It was decided in March to reopen the exchange for the trade of certain crypto-assets and the company continued to trade through to May.

However, trade volumes were insufficient for the company to meet its debts and it was decided the appointment of liquidators was the best option.

Cryptopia had 100 staff at its peak and was the only trader of obscure, niche crypto-currencies in New Zealand.

Help us create a sustainable future for independent local journalism

As New Zealand moves from crisis to recovery mode the need to support local industry has been brought into sharp relief.

As our journalists work to ask the hard questions about our recovery, we also look to you, our readers for support. Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.


Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: Thank you.

With thanks to our partners