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Cryptopia reopens, but investors in dark re hack

Newsroom logo Newsroom 6/03/2019 Nikki Mandow
a screenshot of a cell phone © Provided by Newsroom NZ Ltd

Christchurch-based cryptocurrency exchange Cryptopia has reopened, at least in a limited way.

But investors remain in the dark about whether they will get any of their stolen coins back. 

Cryptocurrency experts have estimated that $23 million-worth of investors’ crypto coins could have been affected by the Jan. 14 hack, though the company has said only that in a “worst case” scenario, 9.4 percent of total holdings have been stolen.

Late last week, Cryptopia tweeted that a “read only” site would be live on Monday. Yesterday afternoon, for the first time in almost two months, long-suffering investors could log into their accounts.

However, the company warned they will only show balances as at Jan. 14, before the hack. 

Cryptocurrency and tax specialist Campbell Pentney from law firm Bell Gully says users will be able to access their accounts, but no one will be able to transact or withdraw.

“But it’s positive that those using the exchange will be able to see their accounts and trading history. Many users will have upcoming tax obligations - for example, the New Zealand tax year is nearly at an end and many overseas investors may have tax returns due - and investors will want adequate records to establish their tax position.”  

However, as the site reopened several investors reported problems logging in, and others were frustrated at the continuing uncertainty.

“How do we know if we have lost our coins if it's pre-hack?” an investor called TronDogs tweeted.

“When will trading and withdrawal come back?" Wang Qi asked. "I hope it's not another two months waiting.”

No one from Cryptopia has been available for comment since the hack, despite police telling investors and media they should address questions to company executives.

Founders Rob Dawson and Adam Clark have not fronted up to investors who are worried about what’s lost and what might be recoverable.

“We are finalising a rebate process for affected users, more details to follow, Thank you for your support during the last few weeks,” was all the company said in yesterday's tweet.

“What is this ‘rebate’? Do we get our whole balance back?” investor Mohamad El Hout asked.

Tim Doyle, director of AgBiz Accountants, says some of his clients have been frustrated by being unable to log in to Cryptopia and access their trading history or know what coins remain on Cryptopia.

He welcomed the reopening of the exchange.

“To write off any Cryptopia coins, it would be prudent to ensure that they will not be recovered. Having the exchange reopen before 31 March should provide certainty for their 2019 tax returns and allow traders to write off any hacked coins for tax purposes.”

However, the basic concerns remain, Doyle says.

“There is still uncertainty to what the final outcome is for the hacked coins - for example what does 9.4 percent loss mean for each specific individual?”

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