Business & Finance

Crypto Exchange Denies Exit Rumors, Promises Reimbursements

The New Zealand-based crypto exchange Cryptopia has recently announced that their operations are set to go live soon, assuring its customers that allegations of exchange being shut down with the hacking incident as a cover story are not true.

The exchange has been pretty active on Twitter after the hacking incident, updating their customers about all their operations including investigations, security enhancements, and the relaunch. Recently, on their blog, they mentioned that they would be re-launching their exchange, bigger and better. As the blog states:

You may have heard various comments about this event being an exit scam but rest assured we are 100% committed to reopening the exchange, bigger and better and to continue trading.

On 14th of January, Cryptopia experienced a security breach in which they suffered significant losses. They put the exchange on maintenance mode immediately. Once the breach was confirmed, they involved relevant agencies to help with the investigations: NZ police and High Tech Crimes Unit. The exchange was shut down for a while to protect existing funds and wallets. The staff was barred from operating the exchange while their access to the servers of Cryptopia was also taken away by the police for further investigation. As soon as their access was restored, Cryptopia started investigating the funds that were stolen. The exchange tweeted with an update in the meantime:

They even requested their customers to stop depositing funds into their old addresses for security purposes. Soon after, they re-opened the exchange’s site with a read-only format while shifting the wallets to more secure servers. They aim to fully relaunch the exchange with better security.

Commenting on the nature of losses on this recent hacking scandal on Twitter, Cryptopia said that they feared to have lost 9.4% of total holdings, which for any crypto exchange is a huge loss. They said;

“We are continuing to work on assessing the impact incurred as a result of the hack in January. Currently, we have calculated that worst case 9.4% of our total holdings was stolen.”

For now, Cryptopia is unable to give an estimate in dollars about the nature of the damages the hacking caused. According to Elementus, a blockchain data analytics company has given a figure of $16 million worth of ethers stolen from cryptopia wallets. In the announcement made by Cryptopia to its users on March 17, it said that the exchange is also preparing to bear the damages its users suffered by reimbursing lost funds.

Exchanges have been prey for hackers in the past as well. Some of them were able to recover while the others could not get back on their feet again with their losses being too severe. For example, Mt. Gox was one of the biggest crypto exchanges in the world before it got hit by the biggest heist in crypto. Mt. Gox lost 740,000 bitcoins, worth $2.9 billion at present. Later on, 200,000 bitcoins were recovered but many of the customers suffered huge losses. The company filed for bankruptcy soon after citing inability to make up for the hefty loss.

In another incident quite recently, the founders of OneCoin were apprehended while they were on their way to execute their exit scheme. The founders didn’t allow withdrawals for their customers and promised huge returns. The project wasn’t backed by a proper blockchain and their prices were controlled internally, instead of supply and demand.

Due to illicit activities in blockchain and crypto world, the customers have become skeptical regarding what they invest in or any company they touch during the process. This needs to change if the crypto and blockchain technologies are to have a future.

Read ALSO: Fraudsters in Bitcoin & Crypto are Clouding the Positive Opinion of the Masses

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Shehryar Hasan

Performing artist, guitarist and sub-editor at BlockPublisher. Shehryar is an electrical engineer and blockchain enthusiast. He holds investments in bitcoin, ethereum, OST, TRX and Ripple. Email: shehryar@blockpublisher.com or contact the editor at editor.news@blockpublisher.com

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