Finger pointing over Cryptopia
Details of a scrap between the failed cryptocurrency exchange Cryptopia and a major shareholder are spilling out, with one of the business’s founders unleashing his version.
Cryptopia collapsed in January after an estimated $23 million worth of assorted cryptocurrencies held in its exchange were hacked and stolen.
Police cyber crime experts have investigated what would rate as one of New Zealand’s biggest ever thefts but no arrests have been made.
The Christchurch-based trading platform has since been placed into liquidation, with cofounder Rob Dawson saying major shareholder Intranel destabilised the business before the hack was discovered.
His claims have been vigorously denied by Intranel.
Intranel is another Christchurch-based tech company, and Dawson’s partner at Cryptopia, Adam Clark, had worked there previously. Intranel provided crucial support to Cryptopia as it rapidly grew in popularity with cryptocurrency traders.
‘‘After the beginning of 2017, when things really started to kick off and we started experiencing exponential growth at a scary pace, we started to take Intranel’s offers more seriously as neither of us identified ourselves as businessmen and only wanted to continue doing the development and innovation work we were already doing,’’ Dawson said in an online post. ‘‘Intranel made us an offer that for 20 per cent [of Cryptopia], they would handle all of the business management and development, things like helping hiring and managing staff, paying tax, lobbying for regulator guidance, all the ‘boring business stuff’, and that they would contract us out four of their [fulltime employees] at a discounted rate while they helped us find and hire staff of our own.’’
Dawson claims Intranel charged Cryptopia ‘‘exorbitant’’ fees for its staff, while his business found itself increasingly reliant on Intranel to keep operating. He said Intranel then used that influence to demand another 5 per cent of Cryptopia shares from him, taking its total holding to just over 25 per cent – which, given the spread of share parcels among other parties, effectively prevented the 75 per cent shareholder vote needed for major transactions it didn’t agree with.
Among various allegations and claims Dawson has been airing have been concerns about Intranel billing Cryptopia for projects and costs which he considered had not been approved or agreed to. Dawson has provided Stuff with copies of invoices which suggest Intranel was billing it hundreds of thousands of dollars for various services – mostly staff costs but including $71,000 for ‘‘tax costs incurred on Christmas bonus payments’’.
Dawson said Cryptopia had decided to ‘‘get rid of’’ Intranel before the hack was discovered.
The two parties parted ways in November, with Dawson claiming the other major shareholders had told Intranel to ‘‘get out’’.
Dave Sanders, managing director of Intranel, said he ‘‘absolutely refuted’’ the allegations made and that they were factually incorrect. The liquidators have indicated it will take many months to unravel the true state of Cryptopia’s finances, with the exchange and all remaining cryptocurrencies held in it frozen indefinitely.
‘‘Neither of us identified ourselves as businessmen.’’ Rob Dawson
Cryptopia co-founder