Cryptopia ex-employee admits to stealing $170K from old BTC addresses

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A former employee at the now-defunct Cryptopia digital currency exchange has admitted to having stolen NZD 245,000 (about US$172,000) from old addresses. The employee believed he could get away with it, but an unrelated error by a former customer exposed his misdeed. This theft is, however, unrelated to the $17 million hack that led the exchange to be liquidated.

The employee, whose name was withheld by the court, worked for Cryptopia before the cryptocurrency exchange fell victim to hackers. According to a report by New Zealand outlet Stuff.co.nz, the employee copied some of the private keys to his personal computer. When the exchange was liquidated and the staff let go, he kept the private keys, and consequently, the control of the digital currencies in the wallet.

Cryptopia was one of the biggest exchanges in New Zealand, with over 80 members of staff. It had also carved out its place in the global digital currency industry, boasting of over 1.4 million clients worldwide. However, it fell victim to a hack in January 2019 and went into liquidation in May. At the time, it had about NZD 170 million in customer funds ($120 million).

The employee had access to over $70 million in customers’ digital currencies, even though he’s no longer working at the exchange. According to court documents, he stole $165,000 at first and then ended up topping it up with an extra $7,000.

It all unraveled when a former Cryptopia customer called Grant Thornton, the firm in charge of the exchange’s liquidation, and claimed to have accidentally deposited some BTC into one of the old exchange wallets. While reviewing this transaction, the liquidators noticed that there were other irregularities. 13 BTC had been withdrawn, some of it via a mixing service to obfuscate its origin and destination.

The employee admitted he had refunded most of the money and pledged to return the rest, as long as the liquidators could promise that no legal action would be taken against him, according to the report.

He would later give himself up to the police where he admitted to his crime. At the time, the summary of the facts read, “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.”

Through his lawyer, the ex-employee admitted to two crimes: theft by a person in a special relationship and theft of more than NZD 1,000. He was convicted at the Christchurch district court and remanded on bail until sentencing on October 20.

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