Former Cryptopia Employee Admits to Stealing $170K in Crypto

Divya  |  Jul 5, 2021

A man has pleaded guilty to charges of stealing more than $170,000 worth of cryptocurrencies and customer data from the now-defunct New Zealand-based currency exchange Cryptopia. The Christchurch district court has granted interim name suppression to the ex-employee, who admitted to 2 charges -- namely, theft by a person in a special relationship, and theft of more than $1000.

Ex-Cryptopia Employee Admits to Theft Using Copies of Private Keys

The staffer in question made copies of Cryptopia’s private keys and data to a USB drive while working at the exchange and uploaded them to his personal computer. This information provided him unrestricted access to tens of thousands of user wallets, and cryptocurrencies worth $100 million at the time.

At its peak, Cryptopia was serving more than 1.8 million customers globally and hired 80 members to its team before a major hack forced it offline. Following the incident, Cryptopia lost more than $25 million in cryptocurrencies and froze all customer accounts. This led to the initiation of liquidation proceedings at the exchange managed by accountancy firm Grant Thornton.

As part of the liquidation, Cryptopia terminated the contracts of all its employees. However, the former employee, whose charges are unrelated to the hack, retained ownership of the private keys and data he had stolen. His illicit transactions were finally brought to light as Grant Thornton reviewed the exchange’s wallets after receiving an email from a former client about a mistaken transfer of funds.

Grant Thornton found that a total of 13 Bitcoin had been siphoned from user wallets. Two of those coins were subsequently tracked to mixing services, that are designed to conceal the origin of an asset and the person controlling it.

Former Employee Believed Nobody Would Track Old Transactions

The stolen Bitcoins were estimated to be worth $164,950 at the time of the theft. However, the liquidators later found that another $10,000 was missing from wallets in other cryptocurrencies. After the ex-staffer learned that Grant Thornton was reviewing Cryptopia’s transactions, he stepped forward to admit to the offenses.

The former employee maintained that he intended to return the stolen currencies over time and sought assurance that he wouldn’t be prosecuted.

According to New Zealand-based news publication The Stuff, “The defendant admitted that he was frustrated with Cryptopia but also motivated by the belief that he could get away with the theft as he thought nobody would ever check the old deposit wallets.” 

Related News