Cryptopia customers did not have individual wallets; liquidator Grant Thornton to manually determine crypto ownership
Thu, 22 Aug 2019, 03:49 am UTC
Grant Thornton, the liquidators of hacked New Zealand Bitcoin exchange Cryptopia, has released another update on the progress made thus far since July 3.
According to a statement released on Aug. 21, Cryptopia did not use individual crypto wallets; instead, crypto-assets were pooled or co-mingled in coin wallets. Being a centralized exchange, users’ trade took place in the internal ledger of the exchange without confirmation on the blockchain.
Thus, the liquidators are having a hard time determining the amounts each client held. Grant Thornton said it has to manually reconcile pooled wallet data with customer information.
“We are working to reconcile the accounts of over 900,000 customers, many holding multiple crypto-assets, millions of transactions and over 400 different crypto-assets. These must be reconciled one-by-one,” the statement read.
Grant Thornton also claimed the significant progress it made in the area of customer data recovery. It can be recalled that the Arizona-based firm hosting Cryptopia’s servers threatened to terminate its services, deleting all Cryptopia data including customer holdings and crypto deposits, if it does not receive about $2 million in compensation.
The professional services firm is also continuing to move the remaining crypto assets held by Cryptopia into a “safe non-hacked environment,” as it is still not clear how the exchange was hacked. It is also cooperating with the New Zealand Police and other authorities internationally to determine the source of the January hack and recover the funds.
Meanwhile, affected customers of the hacked Bitcoin exchange will have to comply with the Know Your Customer (KYC) requirements as part of any repayment process. However, the liquidator said it is still waiting for the court’s go signal to start returning customer funds once the reconciliation process is done.
In May, Grant Thornton filed for bankruptcy protection for Cryptopia in the United States after the exchange suffered from a hacking incident. The bankruptcy court in the Southern District of New York issued an order to Cryptopia granting its emergency motion for provisional relief until June 7, unless extended by the court.
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