Exchange Cryptopia Hacked
We have published a comprehensive article on hacks and scams on exchanges, where we track the biggest historical security breaches and analyze their impact on the cryptocurrency market.
- History of Cryptopia: Rise, Hack, and Liquidation
- Foundation: 2014
- Headquarters: Christchurch, New Zealand
- Founders: Rob Dawson and Adam ClarkTrajectory / Reputation (Peak): It was one of the first and largest cryptocurrency exchanges in New Zealand. It reached over 1.4 million users by 2018 and was among the top 100 exchanges by volume, focusing heavily on altcoins (alternative currencies).
- CEO (Changes): Rob Dawson and Adam Clark (founders) had internal conflicts and resignations. A CEO, Alan Booth, was appointed at one point but was later negotiated out, with Rob Dawson returning.
- Major Hack: January 2019
Closure (Liquidation): May 14, 2019
Beginnings and Rise (2014 - 2017)
Cryptopia was founded in 2014 in Christchurch, New Zealand, by Rob Dawson and Adam Clark. The platform became known for listing a wide variety of altcoins and smaller-cap cryptocurrencies, attracting a large user base.
During the cryptocurrency boom of 2017, Cryptopia experienced massive growth, going from 30,000 users to over 1.4 million in 2018, making it a significant global player.
Internal Issues and Reputation (2018)
The rapid growth led to internal problems. There were managerial frictions, resignations, and allegations of a "toxic" work culture. During this period, the company temporarily suspended new account creation and even froze operations for some coins, citing security issues and an inability to handle the influx of new trades. The founders, Dawson and Clark, ended their working relationship on bad terms.
The Hack (January 2019)
In January 2019, Cryptopia suffered a high-profile hack. Attackers stole cryptocurrencies estimated to be worth $17.85 million (or $30 million New Zealand dollars), representing approximately 10% of their total holdings.
Vulnerability: Although the exchange did not disclose the exact details of the initial attack, the security situation was already precarious. It was later revealed that a former employee had stolen funds and data (over $170,000) in an unrelated incident, claiming he had warned management about the private key vulnerabilities.
Closure and Liquidation (May 2019 - Present)
Following the hack, Cryptopia briefly attempted to reopen in a "read-only" version so users could verify their balances. However, the damage was too extensive.
Cause of Closure: The platform entered liquidation on May 14, 2019, by court order in New Zealand, due to the magnitude of the losses and the company's inability to continue operating.
Process: The accounting firm Grant Thornton was appointed as the liquidator. The liquidation process has been long and complex, involving legal battles to determine ownership of the remaining funds (whether customers or the company itself) and how to distribute them. Progress was made in late 2020 and 2021 regarding the claims registration process for former users to attempt to recover some of their funds.
In summary, Cryptopia was a leading exchange for altcoins until a combination of internal issues, uncontrolled growth, and finally, a multi-million dollar hack, forced it into closure and liquidation in 2019.
Updated 20 dec. 2024
Exchange Cryptopia
Cryptopia Liquidators Begin Distributing $225M to Users ...
The difference is key between a total fraud and an orderly liquidation process.
A significant portion of the funds is being returned, and this is happening under a court-ordered legal process.
Key Court Ruling (2020):
A court ruling in New Zealand in 2020 was crucial. The court determined that the crypto assets held by Cryptopia belonged to the account holders (the customers) and not to the company itself as a corporate asset (such as company property or goodwill). This legal victory gave the customers absolute priority over other company creditors in the liquidation process.
Funds Returned (Ongoing):
Thanks to this ruling, Grant Thornton (the liquidator) has been able to begin the process of returning assets.
The first major distribution phase of funds was recently announced.
In this initial stage, approximately $225 million worth of cryptocurrencies (primarily Bitcoin and Dogecoin) were distributed to over 10,000 verified account holders.
How Much Has Been Recovered?
The $225 million distribution is a massive amount that far exceeds the original loss from the 2019 hack (which was approximately $17.85 million). This is because the process did not just cover the stolen amount; it focused on liquidating and returning all remaining assets that Cryptopia held in custody, the value of which has increased significantly over time due to crypto market appreciation.
The Goal (100% of Assets):
The liquidators have indicated that additional phases will follow this initial distribution. They have even suggested the possibility of a supplementary distribution that could allow eligible account holders to receive up to 100% of their original holdings (using unclaimed funds from accounts that fail to register).
In summary, the return of funds is a reality and is progressing. It is the direct result of a court order that recognized customers as the true owners of the assets. However, the liquidation process for all 960,000 affected users remains complex and is ongoing.
