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article imageNew Zealand crypto firm files for bankruptcy after hacker theft

By Ken Hanly     May 25, 2019 in Technology
Christchurch - Cryptopia Limited, a New Zealand firm which operated a cryptocurrency exchange with over 300,000 accounts from around the globe has filed for US bankruptcy protect after hackers managed to steal more than US $16 million from the company.
Firm started as a hobby
Back in 2014 Cryptopia's founders started the firm as a hobby. It grew quickly in 2017 as the price of Bitcoin soared. However, hackers managed to steal client assets from digital wallets that were stored with the company in January of this year. The exchange reopened in March so that account holders could exchange their assets for Bitcoin, Litecoin, or Dogecoin. However shareholders decided to close the company. An earlier report claims the company suffered what seems an even larger loss: "January 14 was indeed a bad day for the New Zealand-based cryptocurrency exchange as it was on this day that the exchange lost around $23 million worth of user's cryptocurrencies to hackers." However, the $23 million is in New Zealand dollars and is equivalent to about $16 million US.
A recent article notes: "In March, the exchange appeared to have already handled the problems, allowing account holders to access the trading platform again for exchanging their assets. However, when the platform saw more issues, the shareholders collaborated and decided to fold the company, as documented in a declaration filed with the courts."
Firm still has tens of million in digital assets
Liquidators are trying to collect the assets and distribute them to account holders. The liquidators are faced with finding out which account holders own which assets. Unfortunately the information they need is on servers hosted by an Arizona company that has terminated their agreement with Cryptopia and is demanding payment of about $2 million.
The liquidators worry that if they do not pay the two million then the data they need could be overwritten or lost. The liquidator said: “This would be potentially catastrophic for the liquidators and account holders." Although efforts have been made to recover the hacked wallets so far none have been recovered.
Every Cryptopia account holder is a potential creditor in the liquidation. Trade creditors are also owed about $2.6 million as well.
Wikipedia describes Cryptopia: "Cryptopia was a New Zealand cryptocurrency exchange based in Christchurch, which was the target of a $16 million USD theft in January 2019. The exchange closed about May 15, 2019 and began liquidation. .Cryptopia was founded in 2014 by Rob Dawson and Adam Clark. They quit their jobs in 2017 in order to work on the exchange full time. .From May to December 2017 Cryptopia grew from 30,000 to 1,000,000 users."
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