Crypto Exchange Cryptopia Claims It’s Been Hacked, Goes Offline After Months of Problems; Users Cry Exit Scam

January 15, 2019 / by Zachary Mashiach

The Cryptopia cryptocurrency exchange has announced that it has been hacked and is coordinating with police to investigate. This announcement follows two continuous days of unscheduled maintenance, during which time $2.5 million of Ethereum (ETH) and over $1 million of various ERC-20 tokens have been drained from the exchange.

Officials are unavailable for comment, but based on the wording of this statement relative to past statements from hacked cryptocurrency exchanges that suffered a similar fate, it is possible that this is the end of Cryptopia.

The shutdown of Cryptopia follows months of problems and complaints, available on the Cryptopia Bitcointalk thread. For most of 2018, many different cryptocurrencies on Cryptopia were put into maintenance mode. In recent months, users complained of having problems withdrawing major cryptocurrencies like Bitcoin (BTC), Dogecoin (DOGE), and EOS. That’s not too unusual. Reputable exchanges have complaints from users about withdrawals, but it seems Cryptopia users don’t come back to report that their problem was resolved, and new complaints roll in.

In November 2018, it was reported that a 51 percent attack on ArumCoin (AU) resulted in $550,000 of losses for Cryptopia, although Cryptopia denies this. In any case, ArumCoin (AU) users on Cryptopia reported they lost their coins, and no users reported this issue being resolved. It seems complaints about withdrawals for major cryptocurrencies increased after this incident.

Also in November, Bitcoin Cash (BCH) forked and Bitcoin SV (BSV) was born, and Cryptopia stated that it does not support forks. All Cryptopia users who held Bitcoin Cash (BCH) on the exchange did not receive their Bitcoin SV (BSV), indicating that Cryptopia took it all for themselves. This was considered a scam by users.

Even before the hacking incident announced today, users were alleging that Cryptopia is a scam exchange, and as soon as this hack was announced, many users alleged that this is an exit scam. It is suspicious that Cryptopia’s Bitcoin (BTC) wallet went into maintenance mode on January 10, only a few days before the exchange went offline. There were several other maintenances in recent weeks, more than usual for a cryptocurrency exchange. In addition to this, many of the coins listed on Cryptopia were frozen in maintenance mode for long periods of time, according to Bitcointalk posts, giving those users no chance to recover their money before the exchange shut down.

Cryptopia is a major hub for minor altcoins. Indeed, many of the smaller cap cryptocurrencies on CoinMarketCap depended on Cryptopia, and Cryptopia was perhaps viewed as one of the most legitimate exchanges for new or small-cap cryptocurrencies to be listed. If Cryptopia really is dead this could be a fatal blow for numerous cryptocurrencies, and the negative effects could propagate throughout the crypto market.

The shutdown of Cryptopia is happening less than 2 days before the Ethereum (ETH) Constantinople hard fork, which already has potential to be negative for the crypto market.

Cryptopia being hacked and shut down will certainly have some negative impacts in the Ethereum markets since most of the cryptocurrencies on Cryptopia were ERC-20 tokens. The ERC-20 tokens stolen from Cryptopia will likely be dumped, causing additional chaos in the Ethereum space at a time when chaos was already inevitable due to the Constantinople hard fork.