If you are into cryptocurrency trading, you must have learned by now that it’s a risky business – either by doing your research or by having your fingers burned and learning it the hard way.
Aside from the obvious risks of cryptocurrency trading, such as the high volatility in Bitcoin and altcoin prices, there are other risks you need to be aware of when keeping your assets on the blockchain. This isn’t because blockchain technology is inherently risky or vulnerable to fraud or scams. On the contrary, the technology has been rock solid in keeping an immutable ledger by recording every single transaction ever made. However, especially at the early stages of the crypto hype, the pitfalls of blockchain technology weren’t discovered yet, and measures against cybercrime weren’t regularly implemented. Thus, protecting your virtual assets was harder than it is today.
Cryptopia was one of the most popular crypto exchanges back in the day before it faced a massive security breach in 2019. The platform was hacked, and a considerable amount of digital assets was stolen from the wallets of the platform users. The case of Cryptopia liquidation has been going on for a couple of years now and in this article, we will look at how you can get back your lost assets from the platform and learn what happened to the exchange.
About the Cryptopia Exchange
Crytopia is a peer-to-peer cryptocurrency exchange based in Christchurch, New Zealand, launched by Rob Dawson and Adam Clark in 2014. Just like Binance or Coinbase, Cryptopia used to be a cryptocurrency exchange platform. The project initially started off as a hobby, but by 2017, the duo quit their jobs to run the platform full-time, probably thanks to the soaring Bitcoin (BTC) prices at the time.
When Bitcoin and altcoin prices skyrocketed in 2017, Cryptopia had also seriously expanded its services to keep up with the booming market. The platform supported a wide variety of cryptocurrencies, such as Ethereum (ETH), Litecoin (LTC), Cardano (ADA), and even ERC-20 tokens, or lesser-known tokens such as Electroneum (ETN). This drew a lot of attention from coin enthusiasts around the world and turned Cryptopia into a trending platform.
What Happened to Cryptopia?
The platform suffered a security breach on January 14, 2019, causing significant losses to users from over 183 countries around the globe. The Cryptopia team immediately informed the legal authorities, suspended trading activity on the platform, and took Cryptopia into maintenance mode. However, it was later found out that the hacks were still going on even after the police had been involved.
After further investigations, Cryptopia announced that 9.4% of the assets stored on its servers were stolen. This number was equal to 23 million NZD or 16 million USD at the time and was considered to be the biggest scam ever pulled in New Zealand.
After the hack, Cryptopia announced that they would give a rebate to users who lost their funds, but the team didn’t give further explanation as the hows of it were still not clear.
On May 15th, 2019, the Cryptopia team announced that the company was going into liquidation, which meant it was going to sell all the assets to dissolve and finally close the company. The liquidation process was going to be carried out by Grant Thornton New Zealand. It was the company’s job to secure the assets on behalf of all the stakeholders and confirm the amount that the company owed to each one of its customers. Currently, the exchange’s official web domain, cryptopia.co.nz, redirects you to Grant Thornton’s web page, where you can keep yourself updated on the latest developments.
Since then, the investors have been in a state of limbo and the assets have remained frozen for a couple of years. Cryptopia continued saying they were going to restore all funds within a few months. Because Cryptopia operated as a centralized exchange (CEX), it kept custody of its users’ funds and had access to all of the private keys. This created a dispute in terms of the ownership of the assets after the hack.
A small victory was won in February 2020, when the high court of Christchurch ruled that Cryptopia users are entitled to the funds that the exchange was keeping custody of. So, even though how the company itself promised it was going to refund around 800 thousand customers who held a positive cryptocurrency balance in their accounts, along with the platform’s 90 shareholders and 37 creditors, the court decision made sure they can’t get away or change their mind without repercussions. Plus, the holders will be paid in the cryptocurrency they had in their accounts, rather than in fiat currency.
What’s Cryptopia’s Legal Status?
Taken over by the accounting and advisory organization Grant Thornton LLP, Cryptopia’s liquidation process has been going on for a couple of years now. Despite the good news Cryptopia victims received in 2020 on their ownership over the virtual assets, the company still hasn’t refunded the entirety of the loss that occurred due to the alleged hack.
In December 2020, Grant Thornton opened the Cryptopia claims portal to start the process of returning funds to the Cryptopia account holders. The liquidator company draws a roadmap for the claims process, consisting of claim registration, identity verification, claim acceptance, and finally, asset transfer.
Currently, the process is still in the claim registration stage, as the liquidator company says they need to collect more claims to proceed forward. So, if you are one of the victims of the Cryptopia hack, we strongly recommend you join the claim registration process.
In October 2021, Grant Thornton put the second stage of the claims process in motion. The process involves reaching out to account holders to register their claims and creating a dedicated customer support portal on Zendesk to assist account holders with their asset transfer process. You can follow the updates regarding the process from Grant Thornton’s page on Cryptopia liquidation.
How to Get a Refund From Cryptopia Exchange?
If you are one of the victims of the Cryptopia hack and want to get your digital currencies back, you simply need to follow the announcements of Grant Thornton regarding the liquidation process. Also, you should make your claim on the so-called claimant portal and report your loss.
Currently, the liquidation process is in its second stage of claim acceptance, and the liquidator company is working on collecting enough data from the holders. In order to be eligible to receive your assets back in the asset transfer stage, which hasn’t started yet, what you need to do is to fill in the claim acceptance form through the claims portal.
The company has stated that they are expecting to file applications on the redistribution of funds starting from the first half of 2022.
A Few Words Before You Go…
Cryptopia Hack was one of the most prominent hacks in cryptocurrency history, during which funds were stolen from around 800 thousand people around the world. If you are one of the victims, we offer our condolences and advise you to keep yourself posted on the latest updates regarding the liquidation of the platform. If you are not, we hope that you take a valuable lesson from this story on the risks that come with storing your assets on exchange platforms.