Cryptopia Heads to the Crypt

It was arguably all but written in stone months ago, especially after the crippling mid-January hack, but Cryptopia has officially gone into the great crypto beyond. Announced Tuesday evening on their official Twitter feed and then posting a news release on their website Wednesday morning, Cryptopia revealed that they had appointed Grant Thornton New Zealand’s Russell Moore and David Ruscoe as liquidators.

Rumblings about the fate of the exchange began just before the official tweet as people noticed the website was inaccessible and trading appeared to have been halted. The press release is short and not-so-sweet and directs additional enquiries to a liquidation email address, but states that the move came about “despite the efforts of management to reduce cost and return the business to profitability.”

David Ruscoe was quoted in the Grant Thornton press release as saying that they “realize Cryptopia’s customers will want to have this matter resolved as soon as possible.” He went on to say that they would be working with various stakeholders throughout the investigation and liquidation in order to “find the solution that is in the best interests of customers and stakeholders.” Additionally, The liquidators will be working with authorities and independent experts to deal with Cryptopia’s obligations.

The January attack, estimated to have resulted in the loss of as much as $16 million with of Ether and ERC-20 tokens, caused the company to go offline for several days before finally admitting that they’d “suffered a security breach which resulted in significant losses.”

The press release did call out the breach as having a “severe” impact on the company and despite management’s efforts to right the ship, liquidation was the “best path forward” at this point for stakeholders.

While this may be the beginning of the end for Cryptopia, it may also mark the start of extended legal trouble for the exchange. Upon the announcement on Twitter, there were quite a few comments from individuals claiming to be customers and complaining of being unable to withdraw funds since the January attack, with many inviting creditors to unite for legal action.

There is supposed to be an initial report filed next week by Grant Thornton, so we may get a better idea of their plans for the liquidation at that time, but right now it’s definitely understandable that Cryptopia’s users are pissed.

The majority of cryptocurrency users know, or at least should know, that there are always individuals, groups, and even organizations that spend a ginormous amount of time attempting to hack, crack, phish, or otherwise break their way into wallets and exchanges. However, when the breach is through no damn fault of their own and blame clearly resides on the side of the provider, they rightfully expect to be able to withdraw their investments.

While I’m not saying that Cryptopia acted in bad faith after the January loss, the big picture view at this point certainly doesn’t look very promising. Issues like this are exactly why so many in the main stream are reluctant to adopt cryptocurrency and blockchain technology as a whole.

The image of a “lawless” world where people sell illegal drugs, hackers target everyone, scam ICOs rip off the public, and even some established companies that can’t be trusted are all large hurdles that the industry has to shed. Decentralized systems, blockchain, and distributed ledgers could well be the heroic three musketeers for so many industries that it’s imperative that the “bad apples” get weeded out quickly and efficiently.

But the question is… how?

Is regulation the answer?

Should only established organizations with verifiable financial backing be allowed to provide services?

I don’t have the answers and it’s unlikely that anyone has the definitive Rosetta Stone at this point, but it’s becoming more and more obvious that something needs to change. Crypto users and the industry are just now starting to get past the long “nuclear winter” with the price of Bitcoin and many altcoins finally enjoying a favorable ride upwards in price, and fiascos like this one need to be a thing of the past.

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