- Justice Gendall reserved his judgment giving liquidators some more hope to what the hearing might bring.
- The exchange had been taking in more users without proper user data identification, with over 933,000 users on the platform having nothing more than a username and email.
- The exchange also saw its accounts hacked back in early 2019, losing over $24 million, and it had a hard time recovering after this.
The court proceedings for Cryptopia Exchange that was held for four days, from February 11-14, at the Christchurch High Court, seemed to see no judgment being issued.
Justice Gendall reserved his judgment giving liquidators some more hope to what the hearing might bring. Uploads of affidavits and submissions of related documents for the ensuing proceedings have taken place.
The Cryptopia hearing was held 11-14 February at Christchurch High Court. No judgement was delivered with Justice Gendall reserving his judgement. The Liquidators have today uploaded subsequent affidavits and submissions in regards to the proceedings here: https://t.co/94p7iurDKQ
— Cryptopia Exchange (@Cryptopia_NZ) March 10, 2020
The New Zealand-based cryptocurrency exchange had filed in for liquidation by its liquidators Grant Thornton after being found guilty of not observing the appropriate Anti-Money Laundering (AML) requirements when taking in new users.
The exchange had been taking in more users without proper user data identification, with over 933,000 users on the platform having nothing more than a username and email.
Most of Cryptopia’s customer base lies in the US, Netherlands UK, Russia, South Korea, and Brazil, with a very small percentage in its parent company in New Zealand. It was also discovered during investigations that nearly 44,000 with account balances of $23 million never had any identity verification done.
Neither did they have any trading limits on their accounts. Also, to throw more fuel to the fire, a large number of the existing account locations traced back to uninhabited islands near Australia, with thousands more unable to be traced.
The exchange also saw its accounts hacked back in early 2019, losing over $24 million, and it had a hard time recovering after this. This was the first domino to fall in Cryptopia’s long list of failures.
The exchange has also been seen engaging in shady activities, including flowing all user assets into a pooled wallet rather than holding individual user wallets.
The pooled wallet further complicates things for liquidators in identifying the individual user accounts from the wallet, a job that was already quite difficult, to begin with, due to the limited user identification that as carried out by the exchange for a significant portion of their userbase.
Grant Thornton reported that the users who were affected would have to provide additional identification before their assets can be returned in order to comply with AML requirements during the liquidation operation. The current subsequent court proceedings will hope to see a worthy judgment being delivered to Cryptopia from the legal side of things.