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Cryptopia Exchange Protects Users Cryptos in Pooled Wallet: Liquidator

August 21, 2019 at 11:00 AM | By Jit Sutradhar News

The liquidator assigned for the collapse of the New Zealand-based cryptocurrency exchange, Cryptopia, says he is making progress in determining customer holdings, but that the management of user funds for the exchange has caused delays.

The professional services firm Grant Thornton New Zealand was assigned to oversee the liquidation process in May, after the exchange had not recovered from a major attack in mid-January.

In his last update on Wednesday, Grant Thornton provided some good news, saying he had managed to recover data from Cryptopia that was stored in a third-party data center in Arizona. The liquidator previously requested bankruptcy protection in the US. UU. To protect that information, since the Arizona firm was in dispute with Cryptopia and was seeking $ 2 million in compensation.

Grant Thornton also provided an idea of ​​how the exchange had been managed, listing two main reasons why it took so long to find out what and how many cryptocurrency customers they had with Cryptopia.

First, the firm says, customers were not assigned individual wallets. Instead, “the crypto assets themselves were grouped (mixed) in wallets. As a centralized exchange, user transactions would occur in the internal exchange book without confirmation in the blockchain. ”

As such, Grant Thornton says that it is not possible to determine individual property using the keys in users’ wallets. However, Cryptopia kept records of customer holdings and “reported on them in the exchange.”

The second reason for the delay is that Cryptopia never reconciled its customer databases with the cryptocurrencies that are actually in their wallets, according to the liquidator. As such, you must undertake the gigantic task of manually comparing the database with wallets to determine customer stocks.

Grant Thornton said:

“We are hopeful this process will show us the holdings of individual account holders. This process is well underway but will still take some time to complete. We are working to reconcile the accounts of over 900,000 customers, many holding multiple crypto-assets, millions of transactions and over 400 different crypto-assets. These must be reconciled one-by-one.”

The update added that, as a precaution, Grant Thornton continues to move the remaining crypto assets held by Cryptopia to a secure environment, as it is still unclear how the exchange was hacked.

He also continues to work with the New Zealand police and “other international authorities” to determine the source of the January attack and recover the funds.

The New Zealand Courts must still direct the return of Cryptopia’s encryption assets to their former users, Grant Thornton said.

Cryptopia image via Shutterstock

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