Cryptopia Creditor Issues Legal Notice to Liquidator Over Alleged Failures, Fees

A creditor of hacked New Zealand exchange Cryptopia has sent a legal notice to the firm's liquidators over alleged failures to address its claim.

Blockchain machine learning startup GNY claims in a press release Tuesday that accounting firm Grant Thornton New Zealand has failed to accept or reject its creditor claim, has failed to fully make its claim clear in court or reports and has also failed to investigate the cause of the Cryptopia hack in January 2019.
Also at issue are the fees Grant Thornton is taking from the remaining exchange reserves.
GNY says the liquidator has not adequately explained what work it has carried out to warrant NZ$955,618 (US$636,945) in fees.
The startup said it complied with the liquidator’s requests for documentation and further information throughout 2019.
GNY claims to have lost 15 million LML tokens in the hack. It also said the exchange breach caused the value of the token on the market to plummet 95%.
As such, GNY says is owed more than NZ$27 million (US$17.9 million).
In May 2020, GNY sought confirmation of its creditor claim, hoping to recover some of the stolen tokens.
Yet, nine months after the liquidators had sought additional documentation and information, a response was received from Grant Thornton the firm claimed was brief and didn't "adequately address" its concerns and queries.
GNY's legal representative has now issued a "failure to comply" notice on July 21 to the liquidators under sections 285 and 286 of the New Zealand Companies Act 1993.
Citing the extreme complexity of the liquidation, Grant Thornton New Zealand told CoinDesk: "We understand that this is a difficult time for creditors. However, the allegations made by this creditor have no merit and we fully deny them."
In April, Cryptopia creditors won a small victory when it was ruled users of the exchange were entitled to assets, which are classed as property, that they held in Cryptopia accounts at the time of the hack.
The alternative ruling would have seen the assets classed as normal debt to be distributed among both users and creditors.
The funds were valued at over $100 million.

Also read: Last Week’s Big Twitter Hack Was Years in the Making

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Sebastian Sinclair

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.