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Hacked cryptocurrency exchange Cryptopia seeks bankruptcy protection in New York

Cryptopia Limited [Public domain]

Tue, 28 May 2019, 03:48 am UTC

Cryptopia’s assigned liquidator Grant Thornton New Zealand revealed on Monday that it has filed for bankruptcy protection in the United States following the cryptocurrency exchange’s hacking incident in January.

The professional services firm has also taken steps to preserve Cryptopia's data stored and hosted on servers with an Amazon-based company.

In its update, Grant Thornton stated that the urgent interim relief applied will preserve the Cryptopia information that “includes a SQL database containing all account holders’ individual holdings of cryptocurrencies and the account holder contact details. Without this information, reconciling individual holdings with the currencies held by Cryptopia will be impossible.”

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.

Grant Thornton added that it will take “some months at least” to process the recovering of data and determining which account holders own which digital assets.

Meanwhile, the Arizona-based firm hosting Cryptopia’s servers is reportedly terminating its agreement and asking about $2 million in compensation, according to a report from Bloomberg.

We understand that this delay will be frustrating for account holders. For that reason, we are working to resolve these issues as soon as reasonably practicable,” Grant Thornton stated.

Grant Thornton was also expected to file an initial Cryptopia Ltd Liquidators report on the New Zealand Companies Office website last week. In a tweet, Cryptopia said the New Zealand Court granted them a 10-working day extension, and the report is now due on June 4.

Cryptopia suffered a security breach in mid-January that resulted in “significant losses.” Whale Alert, a live tracker of large crypto transactions, said that at that time, 19,391 ether (ETH) tokens and around 48 million centrality (CENNZ) tokens were transferred from Cryptopia to an unknown wallet on January 13.

Despite the mess, CoinDesk reported that Cryptopia former founder and programmer Adam Clark is seeking a second shot in the crypto business with a new exchange platform called Assetylene. Based on his LinkedIn account, Clark has left Cryptopia since February 2018 and has been developing the new product for the last nine months.

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