Cryptopia is a New Zealand-based crypto exchange that went into liquidation last year after it lost over $30 million worth cryptocurrencies in a major hack. The crypto exchange was left with 170 million NZD ($101,198,4500 after the hack. Cryptopia revealing the court’s decision on twitter said that all the assets belong to the account holders and not the company.
(2/2) … individual crypto-asset type. This means that the cryptocurrencies are beneficially owned by the account holders and are not assets of the company. Read the full judgement here: https://t.co/ceUywTVdFY
— Cryptopia Exchange (@Cryptopia_NZ) April 8, 2020
Cryptocurrencies on Cryptopia were held in special trusts.
According to the court’s documents, all cryptocurrencies on Cryptopia exchange were held in special trusts created for the holders’ benefit, and those account holders are named as the co-beneficiaries of those trusts. The documents further reveal that Cryptopia acted only as a trustee in this case. The exchange primarily led the role of a bare trustee concerning the accountholders, the documents stated.
The court’s order further stated that Cryptopia’s principal role was to hold each group of digital assets as trustee for the account holders and follow their instructions.
Confusion over whether users will get back their crypto or not
According to the court’s documents, if the applicant liquidators recover stolen digital assets, they are to be dealt with pro-rata within each specific trust for the digital asset concerned according to the amounts recovered assessed against the amounts stolen from the exchange. This has caused confusion among the users as the exchange did not give any direct interpretation of the court’s decision, but only shared the document.
Some users are suspecting that they will not receive any of their funds since there is a line in the court’s document that says, “the liquidators being unable to ascertain the identity of any particular account holder.” If the liquidators are unable to ascertain the identity of any particular account holder, then the digital assets fall to be dealt with under the s 76 of the Trustee Act.
Cryptopia exchange was formed in 2014 and went into liquidation in May 2019 after suffering a $30 million hack. Now a New Zealand court has ruled that remaining funds with the exchange will go back to the users.