Former Cryptopia Employee Pleads Guilty for Crypto Theft

ByEdward Thompson

Jul 4, 2021

Cryptopia is a New Zealand-based crypto exchange that is now defunct and one of its former employees has pled guilty to charges of stealing cryptocurrencies worth $245,000 (US$171,969). The ex-employee has been granted interim name suppression by a district court after he admitted to two charges. These include theft over $1,000 and theft by an individual in a special relationship. The unnamed employee made copies of the private keys of the exchange during his time there and saved them to a USB storage drive. He then took them home and uploaded the data to his own personal computer. 

More than 80 people were working at the New Zealand-based exchange at its height and it was catering to more than 1.4 million global customers. However, it is now in the liquidation stage because of the disastrous hack that took place in 2019. The hack resulted in the theft of more than $17 million in ether, along with other cryptocurrencies, after which the exchange decided to free all customer accounts. These were worth more than $100 million according to today’s prices. Then, liquidation proceedings were initiated for helping former users of the exchange who were affected in the hack.

But, the charges against this former employee are unrelated to the hack. In September, he reached out to the exchange’s liquidators, Grant Thornton, and said that he had deposited Bitcoin in an old wallet on the Cryptopia exchange and wanted it back. He also admitted that he had returned a portion of the stolen funds and also offered to pay the remaining over time. When a number of transactions were reviewed by Grant Thornton, they found that around 13 bitcoin had been siphoned off from several wallets. The liquidator also found out that they had put two of that bitcoin in a crypto mixer to try and conceal their provenance.

The Bitcoin that was stolen had been valued at $235,000 (US$164,950) when the transactions took place. It was later discovered that an additional $10,000 (US$7,019) in other crypto denominations had also been stolen. The man decided to confess when he heard that Grant Thornton was reviewing the old deposit wallets of the exchange. The liquidators were then informed by the former employee that he had the complete intention of returning the stolen funds, as long as he was given assurance that he wouldn’t be prosecuted. 

He followed through on it the next day and told his partner that he had ‘given it all back. According to reports, the defendant said that he had been frustrated with the Cryptopia exchange. However, his primary motivation was the belief that he could get away with the crime because he thought no one would ever take a look at the old deposit wallets. But, things appeared to have gone the wrong way for him and now he has found himself facing legal proceedings. 

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