Cryptopia Exchange Seeks US-Based Bankruptcy Protection

The exchange is seeking protection, with the aim of preserving its SQL database on trader funds.

Cryptopiais fighting to preserve its SQL database, a crucial piece of data to potentially recover user funds, the exchange announced on May 27 in a special statement. As Bloomberg reported earlier, Cryptopia may be facing a $2 million bill for the hosting of the data. The key to the data preservation may lie in filing with the Bankruptcy Court in the Southern District of New York (SDNY).

While funds have been moved to new wallets, without the database and the history of trades, it is impossible to claim ownership of the coins. A petition to seek protection in the USA based on Cryptopia’s New Zealand liquidation aims to protect the database:

“The interim order preserves the Cryptopia data, which includes a SQL database containing all account holders’ individual holdings of cryptocurrencies and the account holder contact details. Without this information, reconciling individual holdings with the currencies held by Cryptopia will be impossible,” the exchange pointed out.

Cryptopia holds multiple anonymous coins, meaning the trading data is even more important to claim ownership.

The exchange states that the process of liquidation and bankruptcy coincides with a drive to recover data. The process may take months, the market operator stated. The Cryptopia exchange was coming back on track with some wallets open for withdrawals but then closed indefinitely after going into maintenance mode at the end of April.

Soon after that, Cryptopia appointed liquidators and stopped activity indefinitely, to the surprise of the community, against expectations that the exchange would quickly redistribute funds. What is even worse, during the month-long period after Cryptopia returned temporarily, its wallets were known and were potentially open to new deposits.

The Liquidator’s report is expected to be completed on June 4, after an extension of the deadline, potentially revealing more about Cryptopia’s troubles. The exchange hack in January took away as much as $17 million in digital assets. However, the locked up user funds mean the actual losses may be much deeper, leading to locked up funds for multiple holders of both large-scale and obscure digital coins and tokens.