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Bitcoin is Surging but Hacked Crypto Exchange Cryptopia’s Users Remain Seething

Last Updated March 4, 2021 2:43 PM
Mark Emem
Last Updated March 4, 2021 2:43 PM

Despite having promised to compensate customers who lost crypto assets following a security breach in January, New Zealand crypto exchange Cryptopia is yet to provide concrete details on the process.

In a statement  that was released on March 17, Cryptopia announced that it was taking steps to compensate affected users. In this regard, the crypto exchange promised to offer ‘more details around the rebates’ by the end of March. This is yet to happen three days into April.

Consequently, users are still wondering when the compensation will take place.

What’s holding Cryptopia back – the rally?

With Bitcoin and other cryptocurrencies having rallied to yearly highs, the compensation matter is likely to be a thorny one. At the time of the security breach, the price of one bitcoin was under $3,600. Currently, bitcoin is above $4,900 having appreciated by nearly 40 percent.

Bitcoin woke up from a 3-month slumber while turning April. | Source: Coin Market Cap

According to The New Zealand Herald , the crypto exchange has announced that the amount that each affected user will get will be based on the price of the particular cryptocurrency lost as of January 14 when the hack occurred.

Users of the exchange might find this hard to swallow. This is in light of the fact that they will be missing out on double-digit gains that bitcoin has made through no fault of their own. Altcoin holders will be in an even worse position as these crypto assets have appreciated by even bigger margins.

Across the globe, Cryptopia is one of the exchanges offering one of the widest range of coins available for trading. Presently, there are around 100 cryptocurrencies  that can be traded on the exchange.

‘Bagholders’ may have missed out on massive gains

According  to blockchain analytics company Elementus, there were more than 10 altcoins affected by the hack. These include included Ether, Dentacoin, Oyster Pearl, Lisk ML, Centrality, Mothership, Ormeus, DAPS, Zap and Pillar among others.

As an example, those who were holding DAPS token would by now have missed out on a 74% gain per Coin Market Cap. At the time of the security breach, the price of DAPS was around $0.000085 but is now $0.00014.

DAPS token price | Source: Coin Market Cap

Had Cryptopia rolled out its preferred compensation scheme on the day it was announced, those who had been the hardest hit by the plan to be compensated in the fiat equivalent as of January rather than in cryptocurrencies held would have been holders of Ormeus Coin.

When the hack occurred, the coin was trading at $0.056 but on March 17 it hit $1.31, a record high. On paper Ormeus coin holders affected by the hack thus missed out on a gain of more than 2,200 percent! Currently, Ormeus is trading at $0.26, which is still a gain of nearly 360 percent.

Ormeus Coin price | Source: Coin Market Cap

However, there are also those altcoins that are faring much worse than they were in mid-January and this includes Dentacoin. At the time of the security breach, Dentacoin was priced at $0.00014. It has now fallen by around 65 percent to $0.000048.

Dentacoin price | Source: Coin Market Cap

What next – a tussle over the compensation plan?

In light of the opportunity cost, some users would obviously prefer to be compensated in cryptocurrency especially if they have since then appreciated. It is unclear at this point whether there are any affected users who are pursuing legal action in this regard. If there are, this would have eerie similarities to the Mt. Gox scandal.

In the case of Mt. Gox, bitcoin was trading at below $450 when the exchange declared bankruptcy. Some creditors consequently took to the courts seeking to be compensated in bitcoins.