We understand that Cryptopia stakeholders are keen to hear what progress has been made on the liquidation process in the last few weeks. Please find below a summary of what the liquidators have been doing to secure and preserve the crypto-asset holdings for the benefit of those entitled to them.
We have undertaken a significant legal process to further secure the crypto-asset holdings. This is a very positive development.
We have obtained Chapter 15 Bankruptcy Recognition in the United States. Now that the Recognition Order has been entered, certain protections apply to Cryptopia and its property within the territorial jurisdiction of the United States. An “automatic stay” is effective and acts as a moratorium in favour of Cryptopia and its property within the territorial limits of the United States concerning pre-petition claims including litigation (whether class action or otherwise), creditor collection efforts with respect to Cryptopia’s assets in the United States, and efforts by contract counterparties to terminate contracts with Cryptopia.
A similar automatic stay against legal action is also in force under New Zealand insolvency law.
Determining customer holdings
These legal processes mean we have now recovered the customer holdings database from Phoenix. Initiatives are now underway to reconcile this with Cryptopia-controlled crypto-asset wallets. This is not a simple task as there are hundreds of thousands of customers and many hold multiple crypto-assets.
We have begun and continue the process of recovering certain wallets which were established after the January hack and moving them into a “safe non-hacked environment”. The requirement to undertake this task is also contributing to the complexity of the process.
We continue to liaise with our legal advisors to determine how crypto-assets could be returned to customers. However, due to the January hack, this is a complex and time-consuming process. For example, an Exchange that has been hacked cannot simply be reopened. We have certain legal requirements and obligations both in New Zealand and internationally that liquidators must meet, such as Anti Money Laundering/Know Your Client (AML/KYC) requirements when considering any repayment or return of assets.
We continue to liaise with the New Zealand Police and other authorities internationally in relation to the January hack and other issues arising in connection with customers’ use of the Exchange.
Working through the legal process
International law governing crypto-assets is still very much in its infancy. Alongside our legal advisors we are looking to answer questions such as the legal status of crypto-assets, and the legal relationship between Cryptopia and its customers.
Where to go for updates
We appreciate that Cryptopia customers want to know where the process is at and what it means for them and understand the concern they feel. While we are working as fast as we can to resolve the situation as we do not have answers to many customer questions at this stage.
Given the volume of correspondence we regularly receive, we cannot reply to individual correspondence. However, we will continue to provide regular updates via the Cryptopia website, Twitter and Facebook pages.
We have today also updated the frequently asked questions to include answers to questions in relation to transaction listings and creditor claim forms.