Bankrupt Crypto Exchange Cryptopia to Distribute Bitcoin to Cyberattack Victims

The bankrupt cryptocurrency exchange Cryptopia is planning to return digital assets to its users affected by a cyberattack that occurred in 2019. Following a prolonged period of uncertainty and legal proceedings, the New Zealand-based exchange aims to provide relief to those impacted by the security breach, according to a report by Coindesk.

Crypto Redistribution Plan

Cryptopia faced a devastating blow in 2019 when it fell victim to a cyberattack, resulting in the loss of millions of dollars worth of tokens. Despite filing for liquidation thereafter, the exchange has announced plans to redistribute Bitcoin and DOGE tokens to qualifying account holders.

This development followed a court ruling on March 1, marking progress in Cryptopia's bankruptcy case unfolding in Wellington, New Zealand. This ruling paved the way for the exchange's decision to initiate the distribution process, offering hope to users awaiting the recovery of their lost crypto assets.

Besides the cyberattack, Cryptopia encountered setbacks when a former employee breached the platform's security in 2021, exacerbating the firm's financial turmoil. According to the report by Coindesk, eligible users will reportedly receive the first asset distribution within the next three months.

Following the security breach, Cryptopia confirmed the hack on January 14, prompting an indefinite suspension of all trading activities. The exchange, which previously operated without major incident, faced scrutiny and backlash from the cryptocurrency community.

Cryptopia Grapples with Fallout

The breach plunged Cryptopia into chaos, leading to a state of maintenance as the exchange assessed the damage. While details regarding the amount stolen were not disclosed, the exchange vowed to cooperate with authorities, including New Zealand's police and the High Tech Crimes Unit, to apprehend the perpetrators and recover the stolen funds.

In 2021, a former employee of Cryptopia confessed to stealing $176,000 worth of crypto assets and customer data from the exchange. The unnamed individual pleaded guilty before Judge Gerard Lynch at the Christchurch District Court, marking a significant development in the Cryptopia saga, Finance Magnates reported.

The unnamed employee, represented by lawyer Allister Davis, admitted to two charges: theft by a person in a special relationship and theft of more than $1,000. The court determined his guilt and remanded him on bail until sentencing on October 20, 2021.