Light-Fingered Cryptopia’s Employee Was Not Involved in the 2019 Hack

The former Cryptopia employee, whose identity was not revealed for security reasons, was charged for the theft of customer data and stealing about $250,000 worth of cryptocurrencies when he appeared in Christchurch District Court on July 5. The man was later released on bail until the final trial on October 20, 2021.

During his tenure at New Zealand (NZ) crypto asset exchange Cryptopia, which employed over 80 people and served over 1.5 million active users globally, the man used his position to access users' wallets and went ahead to steal their money. In the beginning, the man discussed the question of security concerns especially on the private keys with the security department of the exchange.

Was the attack at Cryptopia an inside job?

After identifying gaps in the exchange's security, the employee created his own uncertified copies of the private keys. He transferred a record of the exchange's digital wallets and stored it on his external storage. Later on uploaded the record at his residence using a different device PC. At that point, the man had won over $100M in a variety of crypto assets.

The man wanted this money to be unclaimed in case the exchange was attacked, which was exactly what occurred a few months later.

The exchange was hacked twice in January 2019, and the attacks saw more than $25M of BTC, Etheruem and other popular crypto assets be stolen, according to CoinIdol, a world blockchain news outlet. This stolen amount represented about 15% of customers' total cryptocurrency holdings and was heralded as the largest theft ever in the country.

The users who were victimized ran to the courts to get compensation, and the legal processes as well as investigations had to begin. All employees were dismissed from work as the exchange was declared bankrupt and put into liquidation in May 2019.

The course of investigation discovered a large sum of BTC was illegally withdrawn to third-party storages in September last year (2020). This trail later led them to the aforementioned Cryptopia worker. However, as reported by the police and the Cryptopia liquidator Grant Thornton, this person had nothing to do with the winter hacks.

In search of criminals

So currently, the criminals behind the major hack have not been identified. There have been speculations that the crime was committed by the infamous North Korean hackers of Lazarus Group. However, investigators have not found any reliable evidence yet.

Back in February 2021, Cryptopia was the target of another attack in which around $40,000 was stolen from a single wallet. The hackers were brazen enough to sneak through the liquidator's surveillance. At the time, there was speculation that the attack was the work of the same hackers who had stolen funds in 2019. But still no reliable evidence has been discovered that would help identify the criminals.

Meanwhile, Grant Thornton liquidators have already spent millions of dollars to secure funds stored on Cryptopia wallets. Users are still waiting to get their funds back.