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Cryptopia Liquidation: Hacked Bitcoin Exchange Didn’t Use Individual Customer Wallets

Osato Avan-Nomayo · @OsatoNomayo | Aug 21, 2019 | 06:00

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Grant Thornton, the liquidators of hacked New Zealand Bitcoin exchange Cryptopia, have released an update on the progress made thus far.

Cryptopia Used Co-mingled Crypto Wallets

According to a statement released on its website on Wednesday (August 21, 2019), Cryptopia didn’t use individual crypto wallets. Instead, the Bitcoin exchange platform pooled customer funds into co-mingled coin wallets.

Thus, the liquidators are facing a difficult time determining the amounts held by customers. Furthermore, Grant Thornton says it has to manually reconcile pooled wallet data with customer data information.

An excerpt from the report reads:

We are working to reconcile the accounts of over 900,000 customers, many holding multiple crypto-assets, millions of transactions and over 400 different crypto-assets). These must be reconciled one-by-one.

At the start of the year, Bitcoinist reported that hackers managed to steal an undisclosed amount of cryptocurrency from Cryptopia. Subsequent details of the case revealed that the theft was close to $20 million.

Liquidator Gains Access to Bitcoin Exchange Data

The statement from Grant Thornton also revealed significant progress in the area of customer data recovery. Its previous update had highlighted some difficulty in obtaining data of belonging to the hacked Bitcoin exchange in the possession of a U.S.-based data center.

Back in May, the company had threatened to delete all Cryptopia data if not compensated with $2 million.

This data contained details of the platform’s customer holdings and some cryptocurrency deposits. Grant Thornton says it is also taking steps to secure all cryptocurrencies in its possession to prevent another hack.

Presently, the liquidators say their main concern is to preserve the integrity of all the available data as it continues the reconciliation process. Back in July, Bitcoinist reported that there was evidence pointing to the Cryptopia hack being an inside job.

KYC Compliance Mandatory

For affected customers of the hacked Bitcoin exchange, Grant Thornton also announced that they will have to fulfill the know your customer (KYC) requirements as part of any repayment process.

Even customers that completely Cryptopia’s KYC step as part of their account opening will have to submit to this new validation process. Grant Thornton says it is also waiting for approval from the Court to commence the return of customer funds once it finishes the reconciliation process.

Do you think the Cryptopia liquidators will be able to return the recovered crypto to affected customers? Let us know in the comments below.

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