In the modern world, people tend to easily forget. But instead of forgetting one of the worst incidents in the cryptocurrency market, CoinSyncom brings the latest Cryptopia hack update.
In January 2019, a hacker’s attack breached the exchange’s security. The estimation is that the attacker took roughly $16 million in Ether (ETH) and ERC-20 tokens.
Grant Thornton updates on Cryptopia
In their latest published update on the Cryptopia hack, the New Zealand-based finance firm, Grant Thornton reflected on the ongoing process of liquidation of the cryptocurrency exchange. In their report, they mention a few obvious problems.
To be able to reimburse Cryptopia’s customers, funds deposited on the exchange have to have determined ownership. However, that is not the case. Grant Thornton states that the exchange was pooling all users’ funds into coins’ individual wallets. Of course, this makes things a lot harder for liquidators.
But blockchain keeps all the data, you ask, right?
Well, yes. However, Cryptopia is (was) a centralized exchange. That means that all trading was happening off-chain in exchange’s internal system. In simpler terms, coins never transact from wallet to wallet. Cryptopia only assigned them to a different account. Of course, there should be a way to verify which account held which amount of funds, but that is for liquidators to discover.
The three phases of Cryptopia hack resolution
Grant Thornton states that, in order to successfully resolve these issues, they are taking three steps.
- Securing assets and company data
- Wallet environment and customer reconciliation
- Identifying users and repatriation of returns
Liquidators, obviously, handled the first. However, regarding the second, and for users more important issue, Grant Thornton explains:
Due to the January 2019 security compromise it was necessary to rebuild the full wallet environment. This was done to ensure no leftover malicious code from the January hack would corrupt the new environment. This recompiling is not a straightforward process, as over 900 different assets were supported by Cryptopia at one time or another.
Regarding the users’ repatriation, the firm states that it is still at an early stage. Therefore, Cryptopia’s clients have to remain patient since there are certain legal matters that need to be resolved first.
Users will have to comply with KYC before redressment
Further down the published update, Grant Thornton discloses what must be done for users to get their locked funds. Therefore, they explain how New Zealand’s regulations demand users to pass through a KYC process. Those who already confirmed their identity with the exchange will have to do it again. Those who failed to do so will have the opportunity to comply once the liquidators contact them via emails.
Nevertheless, the liquidators’ job still remains complicated. Grant Thornton states that they are still to determine the legal connection between Cryptopia and its customers. Moreover, they are yet to find to return funds to rightful owners.
The next scheduled update is due in early December. You can follow the events on CoinSyncom. In the meantime, read our reviews of other exchanges to avoid losing your funds.