Cryptopia Liquidators Face Further Complaints from Anguished Creditors

GNY, a machine learning platform for blockchain applications, has opened fire on liquidators for hacked cryptocurrency exchange Cryptopia, alleging that they failed to comply with their duties. GNY isn’t the only Cryptopia victim seeking recourse and have recently had clashes with David Ruscoe and Russell Moore from Grant Thornton who are overseeing liquidation.

GNY claims to have been the largest wallet holder in the now defunct exchange, which closed its doors in 2019 after suffering a devastating hack. The Channel Islands-based blockchain firm reported losses of more than $18 million when millions of dollars’ worth of LML tokens syphoned from its digital wallets.

GNY’s legal notice further states that liquidators, despite having all the information they requested, didn’t accept or reject its claim. It also accuses them of failure to investigate the hack which, according to GNY, should be separate from the police probe underway to determine criminal liability.

GNY also voiced concerns about Grant Thornton’s fees and expenses which allegedly consumed more than half of “the receipts in the liquidation to date.” It added that liquidators have paid themselves over $1.3 million and also did not explain the work they have made to warrant more than $600k incurred in fees.

These costs continue to mount at the expense of creditors and thousands of users who were left out of pocket or with little recourse, said GNY.

Cryptopia users win battle over locked assets

The digital assets that the company held on Cryptopia were Lisk Machine Learning (LML) tokens, which according to GNY has lost over 95% of its market value. After the hack, the remaining cryptocurrency on Cryptopia was valued at $170 million, but now it worth less as bitcoin price nearly halved.

“GNY also has no quarrel with Cryptopia’s account holders. They should get every penny they had returned, and we agree with them that surplus funds and the company’s own funds should be used to make the hacked accountholders whole. As beneficiaries, we believe that the company’s own assets must now be preserved for that purpose,” read GNY’s notice of failure to comply.

A court order was obtained in April enabled Grant Thornton to use Bitcoin held by Cryptopia to fund the liquidation after the judge classified cryptocurrencies as “property”.

Cryptopia creditors, however, wanted to the court and liquidators to treat and rank account holders equally with other unsecured creditors in the insolvency process.