All Hope Not Lost; Court Grants Cryptopia Users Entitlement to Funds in New Ruling

Users of defunct New Zealand cryptocurrency exchange, Cryptopia, have finally gotten a reason to smile again after more than a year of losing their funds in multiple hacks.

A new ruling by a high court today will ensure that victims receive part of the company’s assets worth over $100 million as compensation for their losses in the Cryptopia hacks.

Justice David Gendall at the High Court in Christchurch declared that the users of the exchange are entitled to the assets they hold in Cryptopia accounts. He, therefore, decided that they should be classed as “property” because they were held in separate trust accounts.

Even though, an alternative ruling would have seen the assets as average debt to be shared amongst the users and the creditors.

Over 800k Cryptopia victims

There are over 800,000 people with positive balances on the exchange before the hack and they would need to be reimbursed, with about 37 creditors and 90 shareholders also fighting for their stakes in the company’s remaining assets.

Back in February 2019, Cryptopia suffered several severe security breaches which led to the loss of crypto assets worth around NZ$170 million (US$101 million). The exchange was forced to shut down and liquidate its assets to repay users and creditors. 

However, it has been difficult for the agency assigned to oversee the firm’s liquidation process to ascertain the details of some users and which cryptocurrency they hold as the records at Cryptopia are kept poorly.

With creditors and shareholders making their claims in the remaining funds, New Zealand’s tax department also seeks a share of NZ$5 million (US$2.9 million) from the funds.

The users and creditors are presenting lawyers to fight the case as to whether the crypto assets are true “property.”

 Justice Gendall concluded and gave his verdict on the case saying:

“I reach the conclusion that the cryptocurrencies here situated in Cryptopia’s exchange are a species of intangible personal property and clearly an identifiable thing of value. Without question they are capable of being the subject matter of a trust.”

“The argument that cryptocurrency is mere information and therefore it is not property is a simplistic one and, in my view, it is wrong in the present context,” he added. “I dismiss it.”

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