Cryptopia Suspends Trading Amid Liquidation Proceedings

Cryptocurrency traders were shocked to learn this week that popular New Zealand digital asset exchange Cryptopia, based in Christchurch, has appointed liquidators and suspended trading.

Cryptopia annouces appointment of liquidator

The news comes less than six months after Cryptopia suffered a major hack, prompting an investigation by the New Zealand Police, and losing an estimated US$16 million worth of funds. In light of this, some predicted as this most recent news broke, that the damage from this hack is likely the primary reason the company has been unable to recover financially.

Appointing professional services firm Grant Thornton to oversee the liquidation proceedings, many of the exchange’s users are now concerned about permanently losing access to their funds. On the exchanges website, instead of normal service, customers are now greeted with a statement which confirms that the company has ceased trading and remarks that liquidation proceedings are “…in the best interests of customers, staff and other stakeholders.”

In an official press release on the 15th May 2019, Grant Thornton confirmed that David Ruscoe and Russell Moore had been appointed to Cryptopia as liquidators, focused on securing assets for the benefits of creditors and stakeholders. New Zealand Companies Office have already updated their records to show that Cryptopia has been in liquidation since the 14th May. 

Confirming the hack’s significance on Cryptopia’s financial situation, the press release read:

The highly publicized hack of Cryptopia’s exchange in January 2019 had a severe impact on the company’s trade. Despite the efforts of management to reduce cost and return the business to profitability, it was decided the appointment of liquidators was in the best interests of customers, staff and other stakeholders.”

 

The release went on to say that given the complexities of the situation, the proceedings of the liquidation are expected to take months, rather than weeks. Liquidation events most often occur when a majority of shareholders agree to cease trading, or likewise the company becomes insolvent and unable to pay its debts – usually resulting in a court order for liquidation.

However, in Cryptopia’s case, it’s stated in official documentation that the liquidators were appointed via a ‘Special Resolution of Shareholders’ rather than forced court order.

According to insolvency guidance from official government body the New Zealand Insolvency and Trustee Service, in this instance liquidators are appointed to collect outstanding assets of the company and distribute the proceeds to shareholders and or creditors.

During normal liquidation proceedings, according to the New Zealand Companies Act (1993), priority shareholders and secured creditors are prioritized and will receive their share of the collected or retrieved assets first. According to the New Zealand Companies Office, Cryptopia has 90 individual shareholders. In any event, this will likely mean a long wait for customers of the Cryptopia exchange before a conclusion is reached.

Grant Thornton assured customers that they are working with independent experts and the relevant authorities to ensure Cryptopia meet their legal obligations. Finally, the press release stated that an initial report of the state of Cryptopia’s liquidation proceedings shall be publicly available via the New Zealand Companies Office next week.

(1) Comments

  1. Dear Sir,
    Shall we wait till conclusion, would we get our funds back after the end of liquidation process? Please reply.
    Thanks.
    Kamran

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