Cryptopia goes into liquidation because of debt, cannot return customers’ assets!

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Recently, Cryptopia, a New Zealand-based cryptocurrency exchange which previously experienced a large security breach, announced that they are going into a liquidation process. They have appointed David Ruscoe and Russell Moore from Grant Thornton New Zealand as the liquidators. 

The result of a recent hack

Previously we reported that Cryptopia suffered from a hacker attack and for a brief moment it almost seemed like Cryptopia has lost all control over their Ethereum wallets. The exchange lost around 30k Ethereum and other assets. Since then Cryptopia had notified the New Zealand police and other legal instances.

After this, judging by their Twitter communication in mid-March, they entered a “coin securing” phase. Within this phase, they said that they are moving all the assets to new wallets. Afterword, they re-opened trading on their platform, and around mid-April they allowed BTC, LTC and DOGE deposits, but never really opened up withdraw functions.

Later, at the end of April, they stopped communicating for a couple of weeks. Then came out with the recent announcement about the liquidation process.

Users cannot withdraw funds because of an investigation

Cryptopia just published a “Liquidation FAQ” where they state:

“We are now undertaking an extensive process to confirm amounts owing and available to return to customers. This is a complex process and will likely require direction from the New Zealand Courts. Until the investigation has concluded we cannot return any crypto-assets to customers.”

Also, they claim that their first priority is to secure all crypto-assets on the exchange. But the weird thing is that they “need to confirm the amounts owing and available to return to customers”. And this process, as they say, is very complex and they need the direction of New Zealand courts “to make sure a fair legal solution is found”.

Went into liquidation because their debts fell due!

As they describe in their FAQ, Cryptopia’s main reason why they’re entering liquidation process is their situation with debt. Customers and Twitter users are commenting that one of the reasons why Cryptopia cannot answer anything about their customer’s assets is because they are thinking of covering their debts with customers money.

Every FAQ about customers assets ends with the same phrase: “Until the investigation has concluded, we cannot confirm whether individual customers will get all of their crypto-assets returned,” or “We cannot confirm any customer balances until we have completed our investigation,” or “At this stage we cannot confirm what will be returned or whether crypto assets will be returned as crypto-assets or fiat currency.”

Basically, they say that they know nothing about their customer’s assets, and they don’t guarantee that they will even get them back at some point.

Respectively, many users are really upset to hear this kind of response from Cryptopia. And they rush to conclusions such as Cryptopia is exit-scamming and stealing customers assets. But that seems like a logical response to what Cryptopia had explained. The exchange basically says that they got huge debt, and they won’t allow anyone to access their funds. Also, they don’t say whether customers will get their funds back. Whether or will they get them back at all, and they cannot even provide a reasonable timeframe.

Binance vs Cryptopia

As we recently witnessed, Binance also experienced a security breach. But the quality of communication and transparency that Binance offered cannot even be comparable to Cryptopia. First of all, you cannot even compare the involvement of Changpeng Zhao, the CEO of Binance, and Alan Booth the CEO of Cryptopia. Alan hasn’t tweeted since October 2018, and Cryptopia’s Twitter account isn’t a good example of communication as well. Binance ruled out multiple tweets a day, explaining everything and answering to almost everyone’s questions. But you sure can’t say that about Cryptopia! Since the announcement about liquidation, they have posted 3 tweets including the one with the announcement.

Funny enough, their CEO once in an interview to CoinCentral said:

“So, for us [Cryptopia], the first thing is trust. If people can’t trust your brand, and that means every part of it, you’re not going to succeed.”

It looks like they deliberately chose the path of not succeeding.

People are really frustrated.

Source:

https://support.cryptopia.co.nz/csm?id=kb_article&sys_id=20d84d54db69778084ed147a3a9619bc
https://www.cryptopia.co.nz
https://www.coingecko.com/en/exchanges/cryptopia?utm_content=cryptopia&utm_medium=search_exchange&utm_source=coingecko
https://coincentral.com/interview-cryptopia-alan-booth/
https://twitter.com/cryptopiaceo?lang=en

Cryptopia hack continues!

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Recent news show that the Cryptopia hack is continuing to cash out Ethereum. Previously we reported that Cryptopia encountered a security breach which resulted in $16 million worth of Ethereum stolen. Since then Cryptopia closed their website, as this is notified to government instances. 

New Zealand police comments

Since the previous hack, New Zealand police is working on solving the crime. They are in talks with Cryptopia, to gain further understanding. “A dedicated investigation team is being established in Christchurch including specialist police staff with expertise in this area. Police are also liaising with relevant partner agencies in New Zealand and overseas,” says in the report.

Hacker continues to steal funds

Toady, judging by recent reports, the hacker stole a little more than 1,675 ETH. These funds, from around 17,000 Cryptopia user wallets, the hacker sent to these addresses. Among these 17k addresses were around 2k wallets that featured in the previous hack. Also, it included 5,000 wallets which users’ had even topped up since the previous theft.

These funds are sent back and forth using the aforementioned addresses, and now the address with most funds is “Cryptopia_Hack2” with 30,789 ETH. As you can see these addresses are flagged by etherscan.io.

Cryptopia no longer has control of their Ethereum wallets

It seems apparent that the hacker or group of hackers now have full control of Cryptopia’s Ethereum wallets.

They can operate at free will with the funds. A Twitter user @notsofast says that Cryptopia have to rebuild the entire hot/cold wallet system before recovering the rest of system’s assets.
Also, in January 28th, they tweeted this image:

Image from Cryptopia’s twitter

Users still depositing funds

Signs of users still depositing funds within the Cryptopia wallets happened just two hours after the second hack. <- Tweet this!
Elementus, a universal Blockchain query engine, reports that these funds are coming from mining pools. Probably these users forgot that they have a designated mining address, where all the mining payments go straight to Cryptopia.

Let’s hope that Cryptopia solves this issue with private keys. Moreover, Cryptopia hasn’t communicated today about the second security breach.

Source:

https://elementus.io/blog/cryptopia-hacker-strikes-again-15-days-later/
https://cointelegraph.com/news/report-new-zealand-cryptopia-exchange-hack-continues
https://ambcrypto.com/cryptopia-compromised-in-another-attack-by-hackers-loses-180k-worth-of-ethereum-eth/
http://www.police.govt.nz/news/release/investigation-involving-crypto-currency-company

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Cryptopia Hacked! Significant Losses!

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Today, January 15th, Cryptopia, a New Zealand altcoin exchange, came out with an announcement that yesterday January 14th, they experienced a security breach. This breach resulted in significant losses they claim. They haven’t yet specified how much has the exchange lost. 

Website closed

Cryptopia home page

Since they noticed this unusual activity they put the website in “maintenance mode”. They noted that they will keep it that way, with trading suspended, until they resolve the issue. Also, the staff notified all the appropriate government instances such as NZ Police and high tech crimes unit.

The Cryptopia Exchange

Cryptopia is known as the altcoin paradise back in the day, but since Binance now is the undefeated leader, and legally a better choice, a lot of traders have moved away from the altcoin exchange to Binance. When looking at coinmarketcap or coingecko, of course, the last 24h volume is 0, because the exchange is down at the moment. However, Cryptopia has lots and lots of markets, in which the expected volume is close to zero. Coinmarketcap says that Cryptopia has around 836 markets, but the last 300 or so are with no volume.

Markets within Cryptopia. Source: coinmarketcap.com

WhalePanda on Twitter pointed out that this is rather weird that this is happening during a bear market. Cryptopia has long lost its altcoin exchange title, and now is basically trying to stay alive. There are some rumors flying around, saying that the theft could be around $2,5 million, but when looking at their recent market volumes, those numbers just do not line up. Only if they had a cold storage where they held all the investors’ funds, which doesn’t seem likely.

Also, this is the first hack of 2019

Source:

https://goo.gl/U2XcDh
https://coinmarketcap.com/exchanges/cryptopia/

Photo taken from Pexels.com