I’ve been a user of Cryptopia for a while now (and have reviewed the exchange here).
Today I received an email from Cryptopia – and the same message has been posted on their news page. I’ve copied it here for your convenience:
Unfortunately, our current bank has notified us that they intend to close our NZDT account on 9 February. Due to this, we are announcing an immediate halt to NZDT deposits from COB today and we are asking all customers to cease sending NZD deposits to our NZDT account.
We will continue to send withdrawals up until the 9th of February if you wish to withdraw your NZDT balance. We will also place a significant sell wall on the BTC/NZDT market at a very competitive market rate to enable any users currently holding NZDT to be able to convert this to BTC at the best rates available in NZ.
Due to the extremely short notice from the bank (and little opportunity to present our case and provide compliance documentation to demonstrate our commitment to the applicable regulations), we believe this is the best course of action to protect our users.
While we are working hard to secure alternative banking services, we have to prepare for the possibility that there may be a period of time between this closure and being able to provide these services again in future.
Rest assured, Cryptopia is committed to ensuring our users remain the top priority and have access to their funds at all times. This notice is a precautionary measure and we remain hopeful that we will be able to resolve this prior to the 9th February deadline with either an extension from our current bank, or an alternative solution to ensure you can continue to trade using NZDT.
We are focused on securing lasting and open relationships with bank providers so that this will not happen again in future. Whilst some exchanges choose to operate by opening bank accounts without being transparent (and running these until they get shut down), we believe this exposes us and our customers to greater risk and uncertainty.
We do apologise for any inconvenience this causes you whilst we work hard to resolve this challenge.
The Cryptopia Team
So what does this mean? Basically:
- You cannot deposit any NZ dollars, effective immediately. Deposits that have been made that are still pending should be processed as normal. But whatever you do, DO NOT send any more NZD to Cryptopia.
- Withdrawals of NZDT to an NZ bank account is available until 9th February.
- Trading on the NZDT pairing will probably stop (I can’t see any info to definitively confirm or deny this, but seems logical)
This has been caused by their processing bank (I believe it’s ASB based on the information I’ve been able to find) probably pulling them aside and having a stern word. I imagine that trying to keep up with the regulatory and legal requirements in this space would be almost impossible.
I’m impressed by the swift and detailed communication Cryptopia have given. However, I would still advise you* to proceed with caution here. Some Twitter users have claimed that this indicates a potential exit scam in progress. This seems unlikely to me, as Cryptopia is now fairly well-established and has a legal presence here in New Zealand (a small country with a small population).
The big risks I can see here for Cryptopia users, especially those based in NZ who would be using the NZDT token and base market, are:
- Deposits that are currently pending never get processed, or by the time they are processed the NZDT markets are shut(apparently there is quite some delay now for depositing NZ dollars into Cryptopia and being credited with NZDT)
- There will likely be a “rush for the door” with regards to withdrawals of NZ dollars – and potentially cryptocurrencies as well if people lose confidence in the exchange. The risk here is that Cryptopia doesn’t have enough funds to cover these withdrawals.
- If you forget to take action, you could wind up with effectively worthless NZDT. As its only purpose was to allow depositing and withdrawal of New Zealand dollars, once this stops on February 9th, NZDT is effectively rendered worthless as it has no utility – unless people see it as a store of value.
Have you been effected by Cryptopia’s latest decision? If so, please leave a comment below! I’ll be posting up a video on this in the next 24 hours as well, giving my thoughts on the situation.
*Nothing I say on this website or any of my social media platforms is to be taken as financial or legal advice. Always conduct independent research before making any investment decision, including consulting with financial and/or legal professionals.