What we know about the Cryptopia hack (so far...)

15 Jan, 2019 | Updated: 15 Jan, 2019
by Jelmer van der Dussen
What we know about the Cryptopia hack (so far...)

On Tuesday, Cryptopia got the dubious reputation of being the first exchange hacked in 2019. The cryptocurrency trading platform announced that it suffered a security breach on Monday. What do we know about the Cryptopia hack so far?

On Monday January 14, Cryptopia tweeted that the exchange was experiencing 'an unscheduled maintenance'. According to the short statement, Cryptopia was 'working to resume services as soon as possible. We will keep you updated.'

Read more: Community reacts to Cryptopia hack: 'First exit scam of 2019?'

This maintenance announcement was a cause for concern within the community right away, especially given the long downtime of Cryptopia. Replying to worried traders on Twitter, Cryptopia stated that 'resuming trading is our number one priority and we have a highly experienced and extensive team dedicated to resolving this as quickly as possible.'

The hack
On Tuesday January 15, around 18 hours after Cryptopia went offline, the exchange came out with a statement revealing the hack. 'On January 14 2019, the Cryptopia Exchange suffered a security breach which resulted in significant losses. Once identified by staff, the exchange was put into maintenance while we assessed damages'. In other words, Cryptopia knew of the hack already when announcing their 'unscheduled maintenance'.

Read more: Breaking: New Zealand cryptocurrency exchange Cryptopia hacked

According to Cryptopia, the New Zealand Police and High Tech Crimes United are 'actively investigating the matter as a major crime and they are assisting us with advice'. During this investigation, Cryptopia will remain in maintenance mode with trading suspended.

The damages
Cryptopia has given no information whatsoever on the funds that were stolen, other than that there were 'significant losses'. With traders worried about their funds, the crypto community dove deeper into the hack and some found a few concerning transactions.

WATCH: Cryptopia: Exit Scam or Hack?

One Redditor on the Cryptopia subreddit, that goes by the name 'toldjahP', noticed there were several large transfers out of the Cryptopia exchange on January 13, a day before the exchange went into maintenance mode.

On January 13, 1.30 PM UTC, there was a transfer of 19,390 ETH from Cryptopia, with a worth of close to $2,5 million. Ten minutes later, 48 million CENNZ tokens (over $1 million) were being moved out of a Cryptopia wallet. And at that exact same time, $300,000 worth of DAPS were transferred out as well.

According to the research, the CENNZ and DAPS tokens went to a different address than the ETH, but there is a connection between the two wallets: later, a transaction is being made from one to the other. In total, the wallets contain $13 million worth of cryptocurrency that could be the result of the hack.

Another source says there is $11 million worth of ERC20 tokens in the exiting wallet. 

This is not confirmed to be part of the hack as of now, but it is suspicious movements around the time of the hack. So far, it seems that at least $2,5 million worth of Ethereum was transferred out just before the hack occured, but there is likely to be more. 

Could it be an exit scam?
Which leads to the question: could this be an exit scam of Cryptopia? Shortly after the hack was announced, @WhalePanda posted this on Twitter:

It's way too early to talk about an exit scam - and even if it is an exit scam, we would probably never know for sure - but the transfers on January 13 do raise some suspicion. A large part of the community doubts if the Cryptopia hack is genuine, but this is an ongoing situation and Chepicap will be sure to keep you updated on all the developments.

What does this mean for Cryptopia?
It really depends on the size of the hack. If $2,5 million worth of cryptocurrency was stolen, Cryptopia could survive. A hack of $13 million would be much, much harder to deal with. With little to no communication coming from the team on the amount of funds stolen, it's still hard to say what the impact will be. 

However, with Cryptopia being the gateway to trading for many small cryptocurrencies, the maintenance time is worrisome for a lot of projects already. A closing of the Cryptopia exchange would mean that the main or only market for a lot of projects would disappear, something that is temporarily happening during the police investigation already.

And of course, there are the many traders that have funds on the Cryptopia exchange and have no idea whether or not their funds are still safe, and if they will ever see them again.  

Read more: CZ responds to Cryptopia hack with suggestions for keeping your coins safe

Altcoin favorite
New Zealand-based cryptocurrency exchange Cryptopia started trading in 2014, and over the years has built a reputation of being an exchange where coins are trading at an early stage. It was popular especially with altcoin traders who were looking for a large upside on their investments.

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