Liquidators Grant Thornton New Zealand have released an update for Cryptopia account holders and other creditors following the hacked exchanges receivership announcement in May.
Grant Thornton says it is continuing its efforts to preserve the exchange’s crypto-asset holdings for the benefit of those entitled to them. The company says it has obtained Chapter 15 Bankruptcy Recognition in the United States. With a Recognition Order now in place certain protections apply to Cryptopia and its property within the territorial jurisdiction of the United States.
For example, 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. In simple terms, this means that for the time being nobody can bring court action against the company – which gives its receivers some breathing room to assess and secure assets – without simultaneously having to fight off lawsuits. The stay is not permanent, however.
Determining customer holdings
The liquidators say they have also recovered the Cryptopia customer database from the Arizona based PhoenixNAP which acted as Cryptopia’s data centre. However, reconciling this data with Cryptopia-controlled crypto-asset wallets is not an easy task, they say, as “there are hundreds of thousands of customers and many hold multiple crypto-assets.”
With regards to when customers can expect a return of funds, Grant Thornton believes the process will likely be a long one, saying; “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. 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.”