RIP: Bitcoin Exchange Cryptopia Begins Liquidation After $15 Million Hacking

www.ccn.com 2019-05-15 18:23
Reading time: ~3 m

By CCN: It may not have sounded the death knell immediately but the January hacking of New Zealand-based cryptocurrency exchange Cryptopia changed everything forever.

Now the crypto exchange which lost NZD$ 23 million (approximately $15 million) in the security breach five months ago has appointed liquidators.

Cryptopia Limited appoints Grant Thornton as Liquidators – https://t.co/A35rq1Jls3

— Cryptopia Exchange (@Cryptopia_NZ) May 15, 2019

In a statement, Cryptopia admitted that the hacking had a ‘severe impact on the company’s trade’. The exchange also disclosed that appointing liquidators came after efforts to cut costs and return to profitability proved unsuccessful.

Beware: Cryptopia’s Liquidation Process Will Test Your Patience

The process is expected to be drawn out. The appointed liquidators, David Ruscoe and Russell Moore, have stated that it will take ‘months rather than weeks’. Users of the exchange will be contacted in a couple of days, according to Ruscoe:

We realise Cryptopia’s customers will want to have this matter resolved as soon as possible. We will conduct a thorough investigation, working with several different stakeholders including management and shareholders, to find the solution that is in the best interests of customers and stakeholders.

The appointment of liquidators is a big blow for ‘bag hodlers’ as it had an extensive portfolio of altcoins. Prior to the hacking Cryptopia boasted of 457 coins listed for trading. In December 2016, Cryptopia had about 30,000 users but this had risen to 1.4 million by January 2018, per Stuff.

Telltale Signs of Serious Trouble

The development does not come entirely as a surprise though. The process of getting back to full service has been painfully slow for instance and this should have hinted at wider problems for anyone who had been watching closely. This included postponing the partial resumption of services several times.

It also took a painfully long time to secure the crypto assets it held. By the beginning of April, the exchange had only secured 50 percent of its entire coin portfolio. This was more than two months after the security breach.

We are 50% through securing all 457 coins listed to new private keys. Please remember to cancel any unwanted open orders as markets are being re-enabled one by one, and please take the time to refresh your 2FA, API key and password if you haven't already.

— Cryptopia Exchange (@Cryptopia_NZ) April 4, 2019

It also took nearly three months for deposits and withdrawals of even mainstream cryptocurrencies such as Bitcoin to be enabled.

Another sign of how serious an impact the hacking had come with the exchange announcing its founders, Adam Clark and Rob Dawson, would be returning to the firm. Additionally, it took nearly a month before New Zealand police allowed the exchange access back to its building. The digital forensic team of the New Zealand Police had been conducting investigations onsite.

Police making progress in crypto-currency investigation https://t.co/oxfgXG1UrO

— NZP Media (@NZPoliceMedia) January 22, 2019