Authorities in New Zealand are not ruling out the possibility of an exit scam during their investigation into a crypto exchange hack that occurred earlier this month. According to an update by the NZ Police Media Center, the amount of stolen funds is “significant.”
Between January 14 and January 15, NZ-based crypto exchange Cryptopia allegedly learned that it got breached, with the hackers stealing digital currency from its customers. A backlash quickly ensued, with many users believing the exchange had faked its own data breach to perform an exit scam (some users claimed their Ethereum wallets were drained right before the shutdown). Cryptopia then notified the appropriate authorities and started an investigation into the breach.
The New Zealand police has since issued two separate updates on the hack. Some highlights from the first update:
- Police are not yet in a position to say how much cryptocurrency is involved, other than it is “a significant amount”
- There has been “a visible police presence” at the company’s headquarters as police take the steps needed to progress the investigation
- The operation includes both a forensic digital investigation of the company, and a physical scene examination at the building
- Police is aware of the exit scam speculation. Their official stance is: “It is too early for us to draw any conclusions and Police will keep an open mind on all possibilities while we gather the information we need.”
- Police has made it a priority to identify and recover missing funds, but suggests those affected should not get their hopes up as “there are likely to be many challenges to achieving this.”
- Cryptopia are cooperating “fully” with the investigation team
In a second notice issued by the Police Media Center, investigators say “good progress is being made and positive lines of enquiry are being developed to identify the source of the transfer, and to identify where the crypto-currencies have been sent.”
Members in the investigation include both local and foreign digital forensic investigators, as well as overseas authorities. The Police again underscores Cryptopia’s assistance in the investigation, perhaps in an effort to dispel any negative speculation surrounding the breach. Authorities expect the investigation to take some time to complete, the notice also said.
It is not uncommon for a cryptocurrency exchange to fall victim to a targeted attack. Cryptocurrency transfers are hard to trace while stolen funds are even harder to recover, making crypto exchanges a lucrative target for hackers.