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Crypto Exchange Cryptopia Files for User Data Protection in New York As Liquidation Continues

Cryptocurrency exchange Cryptopia’s assigned liquidator Grant Thornton New Zealand has filed a motion in the United States to protect the exchange’s user data that is stored in the US by an Arizona-based services company.

According to a recent report by Bloomberg, the Arizona firm has terminated services with the embattled exchange and is now seeking $2 million in owed compensation from the exchange for data storage facilities failure to which the company threatens to destroy the data.

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This prompted Grant Thornton to file for data protection from the bankruptcy court in the Southern District of New York for urgent relief of the firm’s decision to destroy the customer data. In addition, Grant Thornton further requested the US court to recognize the New Zealand legal liquidation process. The motion, which was filed on Friday, May 24th was successful and the court granted a provisional relief on the data destruction until June 7th.

An update to Cryptopia’s stakeholders by Grant Thornton posted on Monday, May 27th, stated that

“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.”

For the exchange users who are holding their breath to be reunited with their funds, the liquidator reiterated its earlier statement that the process will likely take at least a few months to conclude and for the liquidator to settle the funds owed to creditors.

“We expect that the process of recovering data and determining how to make distributions to account holders will take some months at least.  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 company added.

Cryptopia suffered a major hack in mid-January this year resulting in “significant losses.” An independent blockchain analytics firm released a report following the hack claiming that the exchange may have lost more than $16 million in Ether and other ERC-20 tokens. The exchange took its trading platform offline for several weeks as it aliased with law enforcement to try to recover the funds to no success. The exchange resumed business in mid-March promising its users compensation for those whose accounts were affected.

However, its journey to completely restore its business has been a bumpy ride at the very least with banking issues impeding effective service delivery. The exchange then went into liquidation earlier this month without prior notice to its users who have since been crying foul over their locked funds.

The assigned liquidator Grant Thornton was expected to file an initial report with the New Zealand Companies Office last week but failed to do so. A New Zealand court granted the liquidator a 10-working-day extension to submit the report which is now due by June 4th.

Alfonso Martínez
Cryptocurrency enthusiast since 2015, a lover of blockchain technology and everything around her. He joined the Crypto Economy team in 2018 as a content editor specializing in SEO. He is also responsible for the Social Networks of the platform.
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