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Hacked Cryptopia Plans Compensation Scheme

Fredrik Vold
Last updated: | 2 min read

The troubled New Zealand-based cryptocurrency exchange Cryptopia is reportedly working on a compensation scheme for users who have suffered losses as a result of a hack in January which cost users an estimated USD 23 million.

Source: iStock/gemenacom

Co-founder of the exchange Rob Dawson said in an update that there will be “a rebate for customers who unfortunately lost funds.”

“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,” Dawson said.

The statement explained the details as follows:

“If you held balances in coins that were lost in the event you will start to see Withdraws on your account for those coins. The TXID for the withdraw will not exist on the network but will detail how the coin was impacted in the event. For each withdraw you will also see a subsequent deposit of Cryptopia Loss Marker (CLM) […]”

The exchange further said that “CLM is not a coin,” and that it cannot be traded yet. However, it supposedly represents the user’s loss in New Zealand dollar at the time of the hacking.

The company promised more updates on the rebates and the projected dates for trading to be active again by the end of March.

In February, the company said that “worst case 9.4% of our total holdings was stolen.”

A similar scheme was also put in place to compensate users after the 2016 hack of the large Hong Kong-based crypto exchange Bitfinex. Bitfinex then set out to create a new token, called BFXCoin, which would a face value of 1 BFX for every 1 dollar lost. This token was then distributed to users who had suffered a loss as a result of the hack. Within eight months, all BFXCoin holders were able to redeem their tokens at this rate.

As reported, the Cryptopia’s website is in the read-only mode at the moment. It shows balances as at the 14th of January 2019. Also, the ability for users to cancel their standing orders is also live now. The exchange has also reminded its users that “as a result of the new wallets please immediately refrain from depositing funds into old Cryptopia addresses.” Blockchain analysis protocol and platform Elementus said earlier that Cryptopia no longer has the private keys to their Ethereum wallets and the hacker does.

Meanwile, ether address, involved in Cryptopia’s hack has almost ETH 30,790, or USD 4.22 million on its balance.