Stephen D Palley, a partner in the Washington DC office of Anderson Kill, shed light on the Cryptopia – US Bankruptcy court filing, on his Twitter handle. Cryptopia, a now-defunct New Zealand cryptocurrency exchange, has constantly been in the limelight of the cryptocurrency space ever since it was hacked in mid-January 2019.
The exchange that lost millions of dollars worth of cryptocurrencies due to a security breach announced liquidation earlier this month, naming two executives from Grant Thornton as it official liquidators. According to the recent announcements, the exchange filed for U.S bankruptcy protection, and Grant Thornton was investigating the amount of funds that were supposed to be paid back to the customers.
However, this investigation process came to a sudden halt after Phoenix NAP, LLC, an Arizona-based IT service provider, terminated its service agreement and blocked the exchange’s access to the data stored. More so, the service provider demanded a payment of around $2 million. Nevertheless, the court documents released on May 27, 2019, revealed that the New York bankruptcy court had instructed the exchange to pay up $274,408.92 to the Arizona company for the service for May and June. This was followed by the Grant Thornton releasing an official statement that recovering the data itself could take months.
Earlier today, Stephen Palley, a well-known lawyer in the cryptocurrency space, pointed out that the exchange’s highest revenue was from customers in the U.S, followed by Ukraine, Germany, and Russia. The lawyer stated on Twitter,
Most revenue from bankrupt New Zealand crypto exchange came from U.S. accountholders, according to Chapter 15 filing in SDNY bankruptcy court on Friday. pic.twitter.com/61V2KvyhLY
— Palley (@stephendpalley) May 27, 2019
The lawyer further stated,
A Chapter 15 filing is a way to get US bankruptcy court to give effect to a foreign bk/liquidation proceeding. This gives the company the ability to ask the BK Court to order the company’s AZ based database provider to preserve the data”
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