Cryptopia Update: Victims of Hacked Bitcoin Exchange to Receive $100M Compensation
A Christchurch High Court has ruled that over 800,000 users of the now-defunct cryptocurrency exchange platform Cryptopia, are entitled to the digital assets held in their accounts before the hack occurred.
Cryptopia Users Win $100M Crypto Assets Court Case
According to the documents of a Christchurch High Court verdict published on Wednesday (April 8, 2020), liquidators from accounting firm giant Grant Thornton have been ordered to reimburse over 800,000 users of Cryptopia’s exchange platform.
Previously, liquidators filed documents arguing that the remaining crypto assets held by the exchange should not be recognized as property. The assets in question amount to about $101 million.
However, Justice David Gendall of the Christchurch High Court dismissed the notion and added that users are entitled to their crypto balances as Cryptopia held the digital assets in separate trust accounts. An excerpt from the ruling reads:
“The argument that cryptocurrency is mere information and therefore it is not property is a simplistic one and, in my view, it is wrong in the present context.”
Since the exchange’s liquidation back in May 2019, there has been an ongoing battle between 90 shareholders, 37 creditors, and over 800,000 users as to how the remaining assets held by Cryptopia should be disbursed. Justice Gendell provided clarity on the issue by pointing out that:
“Effectively, the tussle which is before the Court is one between the creditors of Cryptopia on the one hand and the account holders who have invested in the various digital assets (“the accountholders”) on the other.”
In addition, the ruling also disclosed that $3.2 million will be made available to creditors as their share of the remaining assets held by Cryptopia.
End of the Saga for Cryptopia Victims?
As previously reported by BTCManager, Cryptopia lost Ether tokens (ETH) and other digital assets worth some $30 million as a result of two cyberattacks back in January 2019. Subsequently, Binance CEO Changpeng Zhao confirmed in a tweet that his company had found and frozen some of the stolen funds from the hack. As at press time, the specific location of all crypto assets stolen from Cryptopia remains unknown or undisclosed.
In March 2019, the exchange restored user balances to their pre-hack state and attempted a relaunch of the platform. Cryptopia was reportedly unable to sustain operations following the hack and went into liquidation in May 2019.
Liquidators from Grant Thornton then declared that the exchange had $4 million in liability and held about $101 million in crypto assets after the hack. However, liquidators were unable to identify specific user accounts and their respective crypto balances as the exchange had failed to comply with anti-money laundering (AML) and Know-Your-Customer (KYC) regulatory policies.