Hacked Crypto Exchange Cryptopia Files for US Bankruptcy Protection

[Mercury]

Hacked cryptocurrency exchange Cryptopia, which went into liquidation earlier this month, has now filed for bankruptcy protection in the U.S.

Cryptopia’s assigned liquidator, professional services firm Grant Thornton New Zealand, announced Monday that it has taken the step to preserve Cryptopia data stored and hosted on servers with an Arizona-based firm.

The bankruptcy court in the Southern District of New York issued an order to Cryptopia on Friday, granting an emergency motion for provisional relief till June 7.

Grant Thornton said:

“The interim order preserves the Cryptopia data, which includes a SQL database containing all account holders’ individual holdings of cryptocurrencies and the account holder contact details. Without this information, reconciling individual holdings with the currencies held by Cryptopia will be impossible.”

The process of recovering the data and determining how to make distributions to account holders will take “some months at least,” the liquidator said.

According to a report from Bloomberg, the Arizona firm is terminating services with Cryptopia and is seeking $2 million in compensation. If that money is not forthcoming, the report suggests, the exchange’s liquidators fear the vital user data could be lost irretrievably.

Cryptopia was hit by a major hack in mid-January resulting in “significant losses.”  Later, it restarted trading services amid banking issues, and finally went into liquidation and suspended trading operations earlier this month.

A blockchain data analytics firm estimated after the hack that as much as $16 million in ether and ERC-20 tokens could have lost.

Grant Thornton was expected to file an initial report on the case last week on the New Zealand Companies Office website. But the New Zealand Court granted a 10 working day extension and the report is now due on June 4, Cryptopia said last week.

Source

[Delgboke]

I think the court should consider cryptoia exchange for the Bankruptcy protection because is not easy to run an exchange to will be able to stand the sudden attack that has crumble the exchange into Bankruptcy, the challenge here is that no strong financial back up that will soon help cryptopia recover from the hack attack.