Customers who held accounts on the embattled Christchurch-based Cryptopia exchange have finally won an unprecedented verdict over cryptocurrency that was lost in a hack last year.
Cryptopia, which had almost a million accounts across the globe, filed for U.S. bankruptcy protection in May 2019 following a US$16 million [AU$25 million] hack four months earlier. The hack resulted in the loss of 15% of its client’s crypto holdings.
The issues arose with the way the exchange held the digital assets. This was in a trust for each token type instead of in individual wallets for its clients.
The judge also ruled that digital assets are declared as “property” under section two of the 1993 Companies Act.
(1/2) Today, 8 April 2020, Justice Gendall delivered his judgement finding firstly, cryptocurrencies are “property” within the definition outlined in s2 of the Companies Act 1993 and secondly, that account holders' cryptocurrency were held on multiple trusts, separated by …
— Cryptopia Exchange (@Cryptopia_NZ) April 8, 2020
Justice David Gendall commented on the unusual nature of the case stating:
“Counsel advise that to the best of their knowledge this is the first occasion on which issues of this type concerning cryptocurrency have been before the courts in New Zealand.”
The official ruling stated that liquidators estimated Cryptopia held cryptocurrency worth around NZ$170 million [US$101 million].
Police have yet to track down the perpetrators, and there are still notions that the January 2019 hack could have been sabotage.