Ex-Employee of Cryptopia Pleaded Guilty of Stealing $170K in Crypto
An ex-employee of Cryptopia admitted that he stole nearly NZ$250,000 or about $170,000 worth of cryptocurrency.
According to a report by a New Zealand news outlet Stuff, the ex-employee has admitted to two charges: theft by a person in a special relationship, and theft of over NZD 1,000 (USD 700). He will receive his official sentence on October 20. The Christchurch district court has granted the man interim name suppression.
The ex-employee reportedly had issues with management about the handling of private keys for many wallets held by the exchange. At one point, the employee made an unauthorized copy of private keys from Cryptopia’s wallets and saved it on an external storage device, transferring the information to his personal computer.
Per a summary of facts from the hearing, this gave him access to tens of thousands of digital wallets and access to over NZD 100 million (USD 70.2 million) worth of different cryptocurrencies.
How did he manage to steal the crypto?
According to the hearing at the Christchurch District Court on Monday before Judge Gerard Lynch, the man made an unauthorized copy of private keys from Cryptopia’s numerous wallets and saved it on a USB storage device.
Subsequently, he took it home and uploaded the data to his personal computer. It is worth noting that possessing the private keys to the wallets of the trading venue potentially provided him with access to thousands of digital wallets alongside $100M of numerous types of cryptocurrencies.
The first signs of the crime happened on September 3rd, 2020, when an ex-customer of the exchange said he deposited bitcoins into an old Cryptopia wallet by mistake and asked the funds to be returned.
The accounting firm Grant Thornton put the trading venue under review and established that 13 BTC had been illegally withdrawn following series of operations. Back then, this amount of cryptocurrency equaled $165,000.
On September 10th, the former staffer of Cryptopia contacted David Ruscoe and Tom Aspin of Grant Thornton and confessed that he stole the equivalent of that amount in BTC. Moreover, he admitted to swiping $7,000 worth of another digital asset.
The ex-employee returned some of the stolen virtual currencies and offered to pay for the rest. However, he was convicted and will be put on bail until sentencing on October 20th.
Unrelated to the exchange’s main hack
Cryptopia was one of New Zealand’s most popular crypto exchanges. At its peak, the exchange had over 80 staff members and more than 1.4 million customers globally.
In January 2019, the crypto exchange Cryptopia admitted that it was a victim of a hack. Its team was able to protect the venue to some extent. Although the exchange refused to reveal the actual amount stolen, the attackers still inflicted massive damage.
The exchange was forced into a liquidation process after the hack. Accounting firm Grant Thornton is managing the ongoing process. According to Stuff.co.nz, however, the recent charges are unrelated to the 2019 hack.
After the exchange began its liquidation process, Cryptopia’s entire staff was laid off, but the ex-employee apparently kept his copy of the private keys.
The hack was noticed after someone told the exchange’s liquidators they had accidentally deposited some bitcoin into an old Cryptopia wallet and requested the funds be returned. After reviewing Cryptopia’s wallets, the liquidators saw 13 bitcoins had been illegally withdrawn from various wallets in a series of transactions, some of which had been laundered via a mixing service. At the time, the laundered bitcoin totalled about NZD 235,000 (USD 165,000). Then the man stole more cryptocurrency, worth about NZD 10,000 (USD 7,000).
“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,” read the summary of facts, as reported by Stuff.
The ex-employee said he had returned some of the stolen currencies and offered to pay back the remaining amount.
