After being allowed an additional ten days to launch the initial liquidators report from the New Zealand Court on 23 May 2019, Cryptopia, in the beginning, published the report filed by Grant Thornton. The report also gave an insight to the background to the events which happened over the previous couple of months. Especially, the report also recorded the unsecured and secured lenders, together with Coca Cola and Dell New Zealand Limited being recorded under secured lenders, and 69 unsecured creditors with a promise of 2. 439 million.
The Twitter statement by the market said,
— Cryptopia Exchange (@Cryptopia_NZ) May 31, 2019
The analysis said that the market, that had over 2.2 million registered customers around the world, scaled its company to the start of 2018 due to the huge surge in the purchase price of both Bitcoin along with other cryptocurrencies. For this reason, the trade had”entered into a range of extended provisions, high-cost contracts to offer the infrastructure” necessary for trading with its own clients.
But, since the market increased throughout 2018, the company was also affected due to the substantial drop in trade quantity. This, then, caused the firm reducing”its cost in an effort to minimize trading losses” This was followed with the foreign exchange falling victim to a security violation that caused a reduction of over $16 million in cryptocurrencies, and also the company opening an investigation on the situation together with the New Zealand Police, which remains continuing.
The report further said,
“The company then decided to reopen the trade for the transaction of particular crypto-assets at March 2019 and proceeded to exchange during the date of Liquidation. But, trade volumes were inadequate for the Company to Satisfy its debts as they fell due and it had been determined the appointment of liquidators was in the best interest […]”
More so, another court order obsolete 29 May 2019 has enabled the company to convert the Bitcoins which were”held at the business pocket out of known customers funds” into fiat so as to finance the liquidation procedure and safeguard clients’ cryptocurrency holdings.
Further, the report also disclosed that the liquidators are to begin the audit along with the client’s verification procedure. Moreover, the liquidators haven’t gained access to the database that’s needed to re-fund the system’s clients. The report said,
“Until the consumer equilibrium database is reconciled using all the crypto-asset pockets run by the business, we cannot affirm the worth of consumer holding.”
Spencer ellis, a Twitter user stated,
“TLDR; We have not done anything to give folks their crypto straight back, but we will market Cryptopias 344 BTC to pay the expenses of the liquidation.”
Troy, yet another Twitter user said,
“We could be thankful that direction of capital was taken from @Cryptopia_NZ hands, that had been clearly incompetent with handling capital + safety”