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Cryptopia Releases Update to Users Regarding Liquidations From 2019 Hack

2 mins
Updated by Ryan James
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In Brief

  • Cryptopia announced that customers that have registered with the platform will now be asked to verify balances.
  • This comes almost three years after the New Zealand exchange was hacked, and is the last step before bereft customers receive their assets.
  • Another recent bankruptcy process for FTX is likely to take months, if not years, according to one crypto lawyer.
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New Zealand crypto exchange Cryptopia has announced the third phase of its reimbursement plan after a 2019 hack that saw customers lose over $15 million.

In the third phase, account holders whose identities were previously verified can log onto a claims portal to confirm that their balances are correct. After that, in stage 4, customers will receive their outstanding asset balances.

Cryptopia’s 2019 hack

Cryptopia filed for bankruptcy protection and went into liquidation in May 2019 after a Jan. 2019 hack that saw 15% of client funds stolen.

Since 2020, liquidator Grant Thornton has called on account holders to register and identify themselves. This is because Cryptopia stored customer funds in a pooled wallet rather than individual wallets. The exchange executed trades on an internal ledger and recorded them in a database. Accordingly, the liquidator had to reconcile both to find out customer balances before the hack.

Grant Thornton said it would take some time for invitations to be sent to customers. The liquidator offered customers the option of contacting the Cryptopia customer support portal for inquiries.

FTX customers begin the long journey to wholeness

Even as Cryptopia customers can start to breathe a little easier following a liquidation process that has taken almost two years, clients of a certain Bahamian exchange are only beginning their journey toward wholeness.

On Nov. 10., 2022, FTX CEO Sam Bankman-Fried (SBF) announced that his crumbling crypto business was looking to raise around $8 billion in liquidity to help pay back customers. 

The amount raised a few eyebrows as the number of crypto companies with substantial assets has grown substantially thinner after the collapse of the Terra stablecoin in May 2022.

On Nov. 11, 2022, FTX filed for Chapter 11 bankruptcy after failing to raise the required capital. This means that the courts will decide how customers and other stakeholders will be paid. FTX has 120 days to file a reorganization plan for creditors to review. Ultimately, the Delaware Chancery Court needs to approve the plan. A bankruptcy filing also allows FTX to continue operating.

In the short term, FTX announced that holders of specific tokens on the Tron blockchain could withdraw their assets. Speaking on Bloomberg TV, crypto lawyer Timothy Spangler said that it could take months, if not years, for the remainder of FTX customers to be made whole.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...