Cryptopia Victim Sues Grant Thornton for Negligence of Duty

Cryptopia’s dissolution procedure is making waves once more. This time, a significant company creditor appears to be dragging its liquidators to court. Earlier today, GNY, a tech firm with a specific focus on artificial intelligence, filed a notice alleging that Grant Thornton, Cryptopia’s liquidator, had failed to comply with its fiduciary duties.

No Transparency with Grant Thornton

The company’s filing alleged that Grant Thornton had messed up handling the liquidation process, thus costing creditors their money. The notice of liquidators’ failure to comply with duties is the final step before filing a lawsuit, although there’s little proof that GNY’s suit won’t arrive soon.

Speaking to industry news source Cointelegraph, Cosmas Wong, GNY’s founder and chief executive, pointed to the fact that Grant Thornton had been fined previously for various violations. He explained that the company had asked Grant Thornton to be filled in on the liquidation process, but the latter hadn’t gotten back. 

“We’re not expecting that they pay us back. That’s not what happens in a liquidation, but we do expect them to admit the claim. Right now, it sounds like — feels like — they’re trying to pretend that we’re not there.”

GNY has been quite vocal in its disdain for the liquidation of Cryptopia’s claims. It sued the exchange before the liquidation process began last year, claiming that it merely wanted to ensure that the liquidation process was handled equitably and transparently.

Grant Thornton has claimed in a statement to Cointelegraph that the claim is baseless. A representative for the company explained that while they understand the difficulty that creditors are facing, they wouldn’t entertain “defamatory claims” that could discredit them.

Cryptopia Investors’ Big Win

Creditors in the Cryptopia case have been less than pleased with the exchange’s management and its method of handling the liquidation. Even though the exchange suffered its hack — which saw it lose about NZ$23 million (or $16 million) — over a year ago, users have had to jump through several hurdles to get to this point.

In May, the High Court of New Zealand delivered a judgment concerning the creditors’ claims, essentially ordering that creditors get paid. According to a Twitter thread from Cryptopia, the judge had ruled that exchange customers owned the assets — not the exchange itself.

The judgment revealed that users’ assets on the exchange were paid in multiple trusts. Each of these trusts grouped account holders who owned a particular type of digital asset.

Thus, account holders within each group would be treated as co-beneficiaries of the same trust. The High Court judge also confirmed that cryptocurrencies are a specie of intangible personal property under New Zealand’s laws. Thus, they are an identifiable thing of value.

The court added that if the liquidators succeed in recovering the stolen assets:

“They are to be dealt with pro rata within each specific trust for the digital asset concerned according to the amounts recovered assessed against the amounts stolen.”

However, the judge also pointed out that the pool of liquidated assets should be equal to about NZD 5.4 million [$3.22 million]. Thus, creditors might end up getting just 50 percent of their claims.