Business

Ed Drake

Critical hack pushes Cryptopia exchange over the brink of liquidation

New Zealand-based cryptocurrency exchange Cryptopia is closing after filing for bankruptcy, just a matter of months after the firm was hit with a NZ$23 million ($15 million) hack.

According to an announcement, the exchange has appointed liquidators to oversee the operation, as it prepares to distribute what remains of company assets to creditors.

Following the hack, Cryptopia is reported to have introduced a series of cost-cutting measures, as well as taking steps to increase profitability, without success.

Reflecting on the causes of the firm’s difficulties, liquidator David Ruscoe said he would now push for a speedy resolution in the best interests of customers and stakeholders, though warned the process from here is expected to run to several months. He explained:

“We realise Cryptopia’s customers will want to have this matter resolved as soon as possible. We will conduct a thorough investigation, working with several different stakeholders including management and shareholders, to find the solution that is in the best interests of customers and stakeholders.”

The decision to appoint liquidators has implications for some crypto markets and altcoin markets, with Cryptopia’s remaining holdings now expected to be sold to recover creditor monies.

With Cryptopia boasting over 14 million users at one time, the loss of the exchange will be a significant blow for users in New Zealand, as well as the rest of the world.

Nevertheless, the news is not unexpected, with several signs that the firm had been struggling in recent weeks.

After the platform was hacked, Cryptopia took an unusually long time to secure its funds. In a tweet from the exchange at the time, Cryptopia confirmed 50% of its portfolio had been secured, albeit two months after the platform was hacked:

“We are 50% through securing all 457 coins listed to new private keys. Please remember to cancel any unwanted open orders as markets are being re-enabled one by one, and please take the time to refresh your 2FA, API key and password if you haven’t already.”

Furthermore, the exchange took three months to reopen withdrawals and deposits, significantly impacting on its trading business.

With the exchange only the latest victim of crypto hackers, their fate should serve as a warning to other exchanges to tighten up security and, in particular, the protection of client funds.

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