Cryptocurrency hack: Cryptopia could be held liable for losses, expert says

  • 17/01/2019

A Christchurch-based cryptocurrency exchange hit by hackers could soon find itself targeted by its own customers.

Losses at Cryptopia are reported to be in the millions, with thousands of ethereum and millions of centrality tokens missing.

Auckland University associate professor Alex Simms says Cryptopia's done everything in its terms and conditions to say it's not liable - but that might not protect the company.

"You can't contract out of consumer law, so if it is shown later that, for example, they didn't exercise reasonable care and skill, they could potentially be sued."

Prof Simms says there are free dispute resolution services available for affected customers.

She says the Financial Markets Authority has focused on making sure exchanges comply with money laundering laws, rather than security.

"I think - this is just my opinion - that those things are being looked at more closely than, what are the actual processes for making sure that the exchange can't be hacked."

She says leaving money on cryptocurrency exchanges is very risky.

"Some of the exchanges in New Zealand deliberately won't hold cryptocurrencies on behalf of people because they just become a target for hackers."

Police say their main priority is returning lost funds to Cryptopia customers.

A dedicated team is being set up in Christchurch to establish what happened and police will be liaising with relevant partner agencies in New Zealand and overseas.

Cryptocurrencies have collapsed in value over the past year since reaching all time highs at the end of 2017.