Cryptopia Files for Bankruptcy Protection in the US

Troubled crypto exchange Cryptopia has filed for bankruptcy protection in the United States and is seeking to protect its clients’ information stored in the country.

The New Zealand-based exchange entered into liquidation earlier this month and appointed two consultants from the consultancy and audit firm Grant Thornton New Zealand, the local wing of Grant Thornton International, to handle the legal proceedings.

On May 27 the exchange confirmed that it has signed with an Arizona-based company to store its clients’ crucial information. However, both entered into a dispute and the Arizona-based firm is now demanding $2 million in compensation and is terminating its agreement with Cryptopia, Bloomberg revealed.

“On Friday 24 May 2019, we filed a petition in the Bankruptcy Court in the Southern District of New York (SDNY) seeking recognition of the New Zealand liquidation in the USA, and we also applied for urgent interim relief. We took these steps to preserve the Cryptopia information that is stored and hosted on servers with an Arizona based business,” Cryptopia’s liquidator noted.

The beginning of Cryptopia's trouble

The trouble for the exchange started earlier this year when it was hacked, resulting in the theft of an undisclosed amount of cryptocurrencies from its user wallets. Though the company only mentioned “significant losses,” a third-party Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term analyst put the estimation of losses at $16 million worth of Ether and ERC20.

The data stored on the servers of the Arizona-based firm include the information of the exchange’s clients holdings and is needed to process the refunds.

“The interim order preserves the Cryptopia data, which includes a SQL database containing all account holders’ individual holdings of Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term and the account holder contact details. Without this information, reconciling individual holdings with the currencies held by Cryptopia will be impossible,” the press release stated.

Moreover, the liquidators revealed that the refund process might take “some months at least” as the process involves “recovering data and determining how to make distributions to account holders.”

“We understand that this delay will be frustrating for account holders. For that reason, we are working to resolve these issues as soon as reasonably practicable,” the announcement added.