Liquidation of hacked cryptocurrency firm Cryptopia heading towards $15m

Liquidators wrapping up the hacked cryptocurrency firm Cryptopia have spent nearly $15 million and still have a long way to go.

Christchurch-based Cryptopia ran an international cryptocurrency exchange which was hacked in January 2019 in one of New Zealand’s biggest thefts.

About $24m of the exchange’s $250m store of cryptocurrencies was shunted to other exchanges after the thieves obtained electronic keys to secret wallets.

Shareholders passed a special resolution in May 2019 putting the company into liquidation and appointing David Ruscoe and Malcolm Moore of Grant Thornton as liquidators.

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Since then the liquidators have charged $4.34m in fees and spent $2.7m on legal costs (both amounts exclusive of GST) as part of the $14,991,000 cost of the liquidation to November 14, 2021.

The liquidators’ fees are for investigations, attempting to secure hacked assets, development and management of the claims’ portal, designing and overseeing an appropriate identity verification process, supervision of the Cryptopia customer support team, engagement with specialist crypto-asset experts and liaising with legal authorities.

The liquidators report good progress in the six months between May and November, saying in their latest report they had started verifying the identity of claimants from 183 countries.

Nearly 80 per cent of users of the exchange by value had become involved in the claims process, they said.

The next stage would be claim acceptance, when claimants would be given an opportunity to agree to their balances.

Before currency could be transferred, they would need to go to court to get approval for the distribution model, to confirm what should be done with unclaimed crypto assets and to set a cut-off date for claims to be received and assessed, the liquidators said.

They continue to work with police and international authorities to determine the source of the January 2019 hack.

Tracing of stolen funds is ongoing, and recovery actions have been filed in the United States, Malaysia and Singapore.

“For the most part, actions in respect of the 2019 hack have been focused on recovering information that sets out the movement of the crypto assets post-hack,” the liquidators said.

Several overseas exchanges had frozen stolen assets.

The liquidators also reported they had received $50,000 in legal costs from a third party who had refused to return customer data released in a court mistake despite High Court orders.

The party was fined $7500 after admitting being in contempt of court.

A former employee who stole $250,000 from the company while employed had returned the full amount and would be sentenced early this year, the liquidators said.