Cryptopia Files for Bankruptcy Protection at U.S. Court

Hacked New Zealand cryptocurrency exchange Cryptopia, which went into liquidation earlier this month, has now filed for bankruptcy protection in the United States.

Professional services firm Grant Thornton New Zealand, Cryptopia’s assigned liquidator, announced today that it has applied for urgent interim relief in the Bankruptcy Court in the Southern District of New York (SDNY) on May 24. This move was made in order to preserve the information that is stored and hosted on servers with an Arizona based firm. The Bankruptcy Court in the SDNY has issued an order, granting Cryptopia an emergency motion for provisional relief till June 7. Grant Thornton said in the announcement:

The interim order preserves the Cryptopia data, which 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.

Grant Thornton is still trying to determine which account holders own, which assets, but unfortunately this information is held by the Arizona-based firm. According to a report from Bloomberg, the unnamed company is now terminating services with Cryptopia, and is requesting $2 million in compensation. The liquidators are concerned that if the sum is not paid, the data could be either lost or overwritten, which “would be potentially catastrophic for the liquidators and account holders”. Grant Thornton also added in the statement:

We expect that the process of recovering data and determining how to make distributions to account holders will take some months at least. 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.

Cryptopia’s liquidators were expected to file an initial report on the New Zealand Companies Office website last week, but the New Zealand Court granted them a 10 working day extension, with the report now being due on June 4, according to a tweet from Cryptopia.

According to blockchain data analytics firm Elementus, the estimated value of the funds stolen in the January 2019 hack was around $16 million in ETH and a multitude of ERC20 tokens. Other observers have been monitoring the movement of the stolen funds, as hackers continue to shuffle the digital assets between addresses.

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