Cryptopia Exchange To Re-Open With 90.6 Percent of User’s Funds Intact, Police Investigation Of Hack Continues

March 1, 2019 / by Zachary Mashiach

Cryptopia is planning on reopening sometime soon, according to its official Twitter account. First, the New Zealand-based exchange will go into read-only mode on Monday, and trading will presumably begin soon after that. Cryptopia states that it is securing each wallet individually to prevent future hacks.

On Jan. 14 Cryptopia was hacked, and the Cryptopia staff immediately contacted police. The police investigation continues at this time, with a goal of identifying the hackers and retrieving the stolen funds, but the police let Cryptopia take control of its office again as of Feb. 14. On Feb. 27, the Founders of Cryptopia, Adam Clark and Rob Dawson, returned to work.

Apparently, 9.4 percent of Cryptopia’s total funds amounting to $3.2 million was stolen during the hack. This stolen cryptocurrency has been liquidated across numerous exchanges as we can see in Figure 1, source: Elementus.

It seems unlikely that police will be able to recover the liquidated cryptocurrency. In any case, 90.6 percent of customer’s funds are safe, and this is apparently enough to re-open Cryptopia. It is undisclosed at this time how customers who lost cryptocurrency during the hack will be repaid.

Assuming stolen funds are not recovered, Cryptopia may have to divert some of its trading fee revenues to customers until the $3.2 million is paid off. This might take some time since Cryptopia has likely lost reputation and users due to the hack.

Assuming the re-launch of Cryptopia goes as planned, this saga is a good example of how cryptocurrency exchanges should handle hacks. Cryptopia immediately went to the police when the hack happened, went through a full investigation, and is reopening while simultaneously being transparent about the losses.

Compare this to Mt. Gox, which did not tell customers there was a hack and then proceeded to operate with a fractional reserve like a Ponzi scheme. The result of Mt. Gox was its collapse, the CEO going to prison, and the entire Bitcoin (BTC) market suffering.

Even though Cryptopia’s reputation may have been hurt by the hack, it is good news for the crypto market that it is going live again. Numerous small cap cryptocurrencies depend on Cryptopia, and in general Cryptopia has been one of the only places for small-cap cryptocurrencies to get listed and gain some real trading activity and value.