The clients of Cryptopia, a crypto exchange into liquidation, are entitled to receive their deposits, a New Zealand court ruled on Wednesday.
This judgment ended the ongoing struggle between the exchange and its users over the ownership of digital assets.
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In his judgment, Justice Gendall J at the High Court in Christchurch classified digital currencies as “property” under Schedule 2 of the country’s Companies Act of 1993 as they were held in individual accounts.
“I reach the conclusion that the cryptocurrencies here situated in Cryptopia’s exchange are a species of intangible personal property and clearly an identifiable thing of value,” the Justice stated. “The argument that cryptocurrency is mere information and therefore it is not property is a simplistic one and, in my view, it is wrong in the present context. I dismiss it.”
(2/2) … individual crypto-asset type. This means that the cryptocurrencies are beneficially owned by the account holders and are not assets of the company. Read the full judgement here: https://t.co/ceUywTVdFY
— Cryptopia Exchange (@Cryptopia_NZ) April 8, 2020
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The trouble for the crypto exchange started after its hack in January last year, which forced it to enter into liquidation.
Though Cryptopia only mentioned that it had suffered “significant losses,” estimations by a third-party blockchain analytics company put the figures to at least $16 million.
The exchange had over 800,000 users with positive balance when it terminated its trading services and paused withdrawals. Apart from them, 37 creditors and 90 shareholders of the exchange are also seeking reimbursements.
The court document also detailed that Cryptopia currently holds NZ$ 170 million (around $101 million) worth digital assets.
Though details of the fund distribution are now clear yet, Grant Thornton New Zealand, the official liquidator of the exchange, will be responsible for the task.
The court filing also detailed that the creditors might end up with NZ$5.4 million ($3.2 million) from the exchange funds, which is less than half of the total claimed amount of NZ$12.7 million ($7.5 million). Notably, New Zealand’s tax department is also seeking NZ$5 million ($2.9 million) as the exchange’s tax dues.