Ex-Cryptopia Employee Pleads Guilty to Stealing $250,000 in Bitcoin

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In Brief
  • A former employee of international currency exchange Cryptopia pled guilty to stealing almost $250,000 in cryptocurrencies.

  • The former employee was able to make off with addresses and private keys of clients.

  • After the companies liquidated, the former employee went back and illegally lifted crypto from former customer’s wallets.

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A former employee of international crypto exchange Cryptopia pled guilty to stealing almost $250,000 in cryptocurrencies.

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The convicted thief, whose name was withheld, appeared in the Christchurch District Court on July 5. Through his lawyer, he admitted to a pair of charges, theft by a person in a special relationship, and theft of more than $1000. After being convicted, the thief was remanded on bail until sentencing on October 20.

Details of the theft

Through his employment at Cryptopia, the former employee was able to gain access to many customer’s wallets. At first, the former employee had actually raised concerns with management around the security of private keys. 

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However, at some point during his employment, the employee made his own unauthorized copies of private keys. He took a record of Cryptopia’s numerous wallets, saved it on a USB storage device, then uploaded it at home on his own computer.

The former employee at this point had access to tens of thousands of digital wallets, in excess of $100 million in different cryptocurrencies. In the event of funds being stolen, there would have been no way for Cryptopia to retrieve them, unless the employee returned them. It turns out this is exactly what he did.

Cryptopia closing

Based in Christchurch, at its peak Cryptopia Ltd. employed more than 80 and had more than 1.4 million customers worldwide. Unfortunately, in January 2019, Cryptopia was hacked and more than $25 million of cryptocurrencies were stolen. At the time, this amounted to 15% of its clients’ digital currency stock. This made it the largest theft in the history of New Zealand.

By May 2019, the company was placed into liquidation, after which all Cryptopia workers’ contracts were terminated. But the employee kept his copy of Cryptopia’s private keys. After checking on wallets after a request, former executives however noticed Bitcoin had been unlawfully withdrawn, in September 2020. The executives then received an email from the employee admitting to stealing the cryptocurrency. He said he had returned some of the stolen currencies and offered to repay the remainder.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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