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To Dystopia and back as Cryptopia returns $400m in crypto to creditors

E Assaf and S Pettigrove

Updated: Jan 25



The long running liquidation of the defunct New Zealand cryptocurrency exchange Cryptopia has reached a pivotal milestone. Liquidators from Grant Thornton have confirmed the return of over NZ$400 million in cryptocurrencies, including Bitcoin and Dogecoin, to 10,000 verified account holders. The distribution follows Justice Gendall’s 2020 decision recognising cryptocurrencies as intangible property and held on trust by exchange.


The Rise and Fall of Cryptopia


Cryptopia was a popular cryptocurrency exchange that suffered a hack in January 2019, resulting in the loss of NZ$30 million from user accounts. This, coupled with other scandals such as a Cryptopia employee making unauthorised copies of private keys in an attempt to steal NZD$250,000 worth of cryptocurrency, embroiled the exchange in turmoil. The incidents damaged the exchange’s reputation and drastically reduced trade volumes, leading to Cryptopia’s eventual liquidation.


Faced with uncertainty about the legal status of cryptocurrency assets in New Zealand, the liquidators sought guidance from the High Court. They filed an application to clarify whether cryptocurrencies qualified as ‘property’ under the Companies Act 1993 (NZ) and could be held in trust for account holders, or if the assets were beneficially owned by Cryptopia.


Justice Gendall determined that the cryptocurrencies held by Cryptopia were intangible personal property and should be classified as trust property. This ruling meant that the cryptocurrencies would be distributed to account holders rather than being treated as company assets. The decision has been oft cited in later cases considering whether crypto should be considered property.


More to Come

These distributions followed years of diligent efforts to identify users and verify millions of transactions across nearly a million accounts. The Liquidators’ Second Report highlights two significant challenges in determining customer holdings:


Customers did not have individual wallets and it is impossible to determine individual ownership using just the keys in the wallets.

No detailed reconciliation process between the customer databases and the crypto-assets held in the wallets has ever been completed.


This marks only the beginning of the distributions, which were approved in March 2024. Grant Thornton celebrated this achievement in a press release and outlined future plans for further distributions:


Following this first distribution, liquidators will continue to follow the approved process. This includes giving notice of cut-off dates before distributing the remaining Bitcoin, Dogecoin and all other cryptocurrencies of sufficient value to account holders. 


Grant Thornton has urged remaining account holders to register on the claims portal to ensure their inclusion in future distributions. The liquidators also mentioned ‘top-up’ payments that will enable account holders to recover up to 100% of their lost funds using ‘unclaimed holdings’ from users not registered in the claims portal by the specified cut-off dates.


Written by Steven Pettigrove and Emma Assaf with Michael Bacina

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