Failed New Zealand cryptocurrency exchange ‘Cryptopia’ have published the first report on the company’s ailing financial situation. The liquidator, Grant Thornton published the report today, revealing that Cryptopia owe over $2.738 million to their creditors.
A total of 69 unsecured creditors are owed over $1.37 million and secured creditors around $912,000. Some of the secured creditors include Coca Cola and Dell NZ.
Employees of the company are also owed in the region of $207,000 for holiday pay and outstanding salaries, according to the report.
Grant Thornton have said that this is just a preliminary report and that the amount owed is unlikely to increase as time goes on.
Cryptopia was a cryptocurrency exchange based in Christchurch, NZ. It employed almost 40 staff and had over 2 million registered users. Due to a period of growth in 2018, the company significantly scaled up to meet customer demands and they entered into a number of long-term, high-cost contracts. After doing so and for unknown reasons, the amount of trading volume decreased in late 2018 and the company was forced to take steps to minimise financial losses. Liquidation started on 15 May of this year.
Then in January 2019, the exchange was hacked and a “significant amount” of crypto-assets were taken. Despite contacting the police and an investigation being launched, the perpetrators have not yet been caught. Estimates put the amount of stolen cryptocurrency at approximately $16million.
At the time the hack was discovered, trading ceased for a short time before reopening in March 2019 for certain types of crypto asset. Unfortunately, trade volumes were deemed insufficient and liquidators were appointed “in the best interests of customers, staff, and other stakeholders”.
In terms of assets held by customers, the report is a little vague. Grant Thornton explain that they are in the process of gaining access to the database that holds information relating to wallets, transactions and customer balances. Once this has been done, a reconciliation of balances will take place against each user. Until this has done, they are unable to ascertain the value of customer holdings.
The report also states that due to an “absence of legal precedent on crypto assets in New Zealand” they are unsure at this time how assets will be returned to stakeholders. They do however state that Cryptopia staff have been engaged to assist staff with the collection of assets and transfer into cold storage wallets where available.
Some users have expressed their anger on Twitter, stating that they demand return of their assets in the same format, and not in fiat currency.
As a customer of #Cryptopia I do not allow to liquidate my deposit on Cryptopia Exchange or convert it to fiat to pay any debts of exchange or for any purposes. I demand my property returned to me unchanged. According to the terms of #Cryptopia coin balances are user's property!
— Pedro (@PedroGalhard) May 23, 2019
Others have stated that as the assets belong to them, not Cryptopia, Grant Thornton are not allowed to hold them and prevent customers from witdrawing. In addition to this, other state they have been unable to get any response from the company since January, leading to significant concerns over the whereabouts of their assets.
Hi! We tried to contact them multiple times. We did get a reply from their support once, when they were still operating, however, it's difficult to call it a real reply. They forwarded our questions to a different team and we never heard back from them 🙁
— Adshares (@adsharesNet) May 31, 2019
In terms of tax liabilities, these are still unknown as the New Zealand authorities were in the process of carrying out an audit when the firm filed for liquidaton.