Cryptopia hacked: Losses estimated at US$3.5 – $11 million
That's a lot of money, especially during a bearish market.
On 14 January Cryptopia went down for "unscheduled maintenance". Then on 15 January it announced that it had "suffered a security breach" resulting in "significant losses". The issue was referred to the New Zealand police, and it's now an active investigation.
The New Zealand police released a statement explaining that a dedicated investigation team is being established, "including specialist police staff with expertise in this area", and that it will be liaising with its counterparts in New Zealand and overseas as it investigates.
While no official number has been given for the losses, some blockchain sleuthing conservatively suggests that losses are at least US$3.5 million.
Bystanders were quick to start throwing around vague suggestions of an exit scam or inside job, pointing at the generally bearish state of the markets and the 17-hour delay between a $2.5 million ETH withdrawal from Cryptopia and the announcement of "unscheduled maintenance", but this is naturally still entirely unproven.
Still, New Zealand police have reportedly locked down the Cryptopia building and are questioning staff.
Where the numbers come from
The estimates of the losses come from the blockchain, with the Cryptopia wallet showing several massive withdrawals, most notably about $2.5 million of ETH and about $1.1 million of Centrality (CENNZ) tokens.
The withdrawn tokens bounced around a bit but seem to be congregating in this address.
That odd $3.5 million is the most conservative estimate because the Cryptopia wallet has reportedly been bleeding for a couple of days now. As much as US$11 million or more, on paper, may have been lost.
But the nature of Cryptopia and its focus on obscure projects means a lot of the missing tokens will be almost impossible for the thief to dispose of. Cryptopia is/was the only market for many of the cryptocurrencies which have been stolen here.
It's too early to speculate on whether the funds will be recovered or whether users will be refunded for their losses, but the general consensus among those who choose to speculate anyway is no to both counts.
The nature of cryptocurrency suggests that funds are unlikely to be recovered. And the nature of the markets coupled with the magnitude of the losses suggests that $3.5 million will be a tough loss for Cryptopia to absorb, especially if it loses users following the incident. And if the losses are as high as $11 million, as some have suggested, it will be even tougher to swallow.
Time will tell how it plays out.
Disclosure: At the time of writing the author holds ETH
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