Ex-Cryptopia Employee Admits to Stealing $170K Worth Of Crypto

An ex-employee of the now-defunct crypto exchange Cryptopia has admitted in court to stealing crypto worth about $170,000. The employee pled guilty to stealing coins and customer data while he worked at Cryptopia when the company was still up and running.

A name suppression by the Christchurch district court of New Zealand keeps the employee anonymous for the time being. The employee pled guilty to two crimes, namely; theft by a person in a special relationship and theft of more than $1,000.

Related Reading | Robinhood Fined $70M For Causing “Significant Harm” To Customers

The crime was brought to light in 2020 due to complaints from a customer that he had deposited coins into a Cryptopia wallet by mistake. Cryptopia has been through a series of problems in the past. Which is what led to its now-defunct state. The company finally collapsed in 2019.

Cryptopia Hacks

Cryptopia suffered two devastating hacks that eventually led to it shutting down in 2019. The company was hacked at the beginning of 2021 in January when a hack led to the theft of over 19,000 Ethereum. The crypto was transferred into an unknown wallet. The value of the crypto at the time of the hack in 2019 was $2.3 million. At this point, Cryptopia was serving a global customer base of 1.8 million customers.

Crypto subsequently went into liquidation that year and began the process of shutting down the exchange and mapping out ways for users to get their crypto back.

Bitcoin price loses momentum as it falls back into $33K range | Source: BTCUSD on TradingView.com

Later that year though, the company fell victim to another hack. This time losing about $15 million worth of crypto to the attackers. The hack happened during the liquidation. Somehow attackers were able to access a wallet that had not fallen victim to the hack and transfer the crypto out of that wallet to an unknown wallet. This hack represented about 15% of the company’s holdings of digital assets.

During the liquidation, employees of the company were terminated. But not before an employee had copied private keys and customer data. These he retained after his employment with the company were terminated.

The data available to this single employee reportedly gave him access to over $100 million worth of digital assets.

The Crime

Having access to the keys, the employee believed that no one would check old transactions during the liquidation. The employee had transferred Bitcoins with the equivalent value of approximately $160,000 out of wallets and over $100,000 worth of other cryptos.

While he was employed at Cryptopia, the employee had made copies of Cryptopia’s private keys and customer data. He stored this on a USB flash drive. Which he then took home and uploaded the data onto his personal computer at home.

Upon finding out that old transactions were in fact going to be reviewed, the employee came forward to admit the theft. According to the employee, he had planned to return the crypto over time. And he had apparently taken the crypto because he was frustrated with the company, Cryptopia.

Related Reading | Bitcoin Whale Warns Of “November 2018 Vibes.” What This Means

The employee also admitted that he had believed he would get away with the theft as he did not think that anyone would go on to check old transactions.

Upon stepping forward, the employee had sought assurance that he would not be persecuted for the offenses. Although he has now been arrested and charged and will remain in jail until his sentencing, which is scheduled for October 20th, 2021.

The crime is unrelated to the Cryptopia hack. The employee has returned some of the cryptos and has promised to pay back the rest over time.

Featured image from PCMag, chart from TradingView.com