Cryptopia exchange folds as Binance reopens
Cryptopia has finally called in the administrators, unable to recover from a $16m hack. Meanwhile, Binance re-opens its deposits and withdrawals after a $40 million hack.
New Zealand exchange Cryptopia is winding up its business, unable to recover from a hack in January. Despite earlier promising to reopen for trading, the company now moves into administration. Cryptopia is a smaller exchange and did not have the reserves to cover the losses which netted the attackers $16 million in cryptocurrency. While the exchange closed temporarily, pending a police investigation, the theft proved too great to sustain. A message posted on Cryptopia’s website yesterday explains:
Despite the efforts of management to reduce cost and return the business to profitability, it was decided the appointment of liquidators was, in the best interests of customers, staff and other stakeholders.
The liquidators are focused on securing the assets for the benefit of all stakeholders. While this process and investigations take place, trading on the exchange is suspended.
‘Given the complexities involved we expect the investigation to take months rather than weeks.’
Meanwhile, Binance has reopened customer deposits and withdrawals, a week after it was the target of a sophisticated hack, which netted the attackers 7,000 BTC from the exchange’s hot wallet. In the wake of the hack, Binance CEO Changpeng ‘CZ’ Zhao suggested a reorganisation of the Bitcoin blockchain to prevent the hackers from accessing the funds, while covering all losses from the ‘SAFU’ fund.
Mitigation, not prevention
Mitigating rather than simply preventing hacks will become a significant task for crypto exchanges in the coming months and years, since it is impossible to prevent attacks entirely. More and more exchanges and brokers are holding millions or even billions of dollars of customer money. Coinbase Custody, for example, recently passed the $1 billion mark for assets under management. Coinbase CEO Brian Armstrong told Consensus, ‘We launched our custody 12 months ago, we’ve just crossed $1 billion AUM or institutions, 70 institutions have signed up, adding about $150 million AUM a month, so, to a large degree that has been a success.’