The firm appointed to oversee the liquidation of New Zealand crypto exchange Cryptopia has been forced to reconcile the accounts of its 900,000 former users individually, after it emerged the exchange did not keep client funds in separate wallets.
Audit firm Grant Thornton, which was appointed to manage the liquidation, has said in an update to stakeholders that it had difficulty in obtaining data from Cryptopia servers, and that it was “impossible to determine individual ownership using just the keys in the wallets.”
They found that while Cryptopia had been keeping track of exactly who owned what, it did so in a central internal ledger, with no confirmation sent to the blockchain.
With some 900,000 accounts holding sums across 400 different crypto assets, the ongoing process of reconciliation is expected to be a lengthy exercise.
However, in an update posted to its website, Grant Thornton said it still requires input from the courts in New Zealand before it can begin to distribute the remaining assets to creditors of the now-defunct exchange.
“While our reconciliation process is progressing well, we still require direction from the New Zealand Courts before we can return crypto-assets to customers. The information outlining the legal process included in the last communication are still current and is below. We continue to liaise with our legal advisors as to the legal status of crypto-assets, the legal relationship between Cryptopia and its customers and to determine how crypto-assets could be returned to customers.”
The liquidator added, “We have certain legal requirements and obligations both in New Zealand and internationally that liquidators must meet, such as Anti Money Laundering/Know Your Client (AML/KYC) requirements when considering any repayment or return of assets.