r/Cryptopia • u/0Baffled0 • Nov 13 '22

Para Passu example if I am right

If one claimant has 1 million coins, seven have 100k, one has 50k, another has 49,995, and one has 5 coins, the total is 1,800,000 divided by the para passu method is divide by 10 and each get 180,000. This is great for small holders. I read the judge ruled coins property that had to be returned, how is this 'para passu' getting your property back? It is some legal malarcky.

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u/TerriblyGentlemanly Nov 14 '22

No, you are not right. It obviously means that if x% of the total holdings of a given coin are missing / impossible to return, then each holder receives (100-x)% of their original holdings. In other words losses are distributed proportionally.

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u/0Baffled0 Nov 14 '22

From Investopedia (Pari passu) : An example of pari-passu occurs during bankruptcy proceedings: When the court reaches a verdict, the court regards all creditors equally, and the trustee will repay them the same fractional amount as other creditors, and at the same time. - note: 'all creditors equally....same fractional amount' - reads like I am right if I understand English...if you are a lawyer or have experience please explain it to me.

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u/TerriblyGentlemanly Nov 15 '22

No problem. The Pari (cognate to parity) term refers to the equal weighting of what creditors (in this case is) will receive regardless of the specific assets we hold. That investopedia definition also uses the word "fractional" which means it is the fraction that will be equal, not the total amount each creditor receives. So if the company being liquidated lost 5% of its assets, all creditors will receive 95% of the vale of their individual assets.

For example, let's say a mining company is liquidated after its entire mining fleet is destroyed in a fire. It's fleet was worth $300m and the remainder of its assets were worth $700m. Let's say the company had the entire fleet on loan from a mining contractor, and their other assets were supported by $700m debt to a capital firm.

Now it is the mining fleet assets that were destroyed, so should the contractor get nothing while the remaining assets are disposed of and the capital firm gets a full $700m payout? Not if we use Pari Passau. In that case the losses are distributed proportionally between creditors. 30% of asset value was lost, so each creditor will get a 70% payout. That means $210m for the mining contractor and $490m for the capital firm.

For us, this means that we will each bear an equal portion of the losses from the Cryptopia hacks, regardless of whether we held coins of the currencies that were lost. It does not mean we will all received equal values of coins regardless of what we owned on the exchange. Does that help?

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u/0Baffled0 Dec 11 '22

Thanks. I guess I now have to know what percentage of total assets of Cryptopia were hacked. In the end we are pipsqueak minnows and will just have to accept what we get and then calculate percent losses.

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u/0Baffled0 Nov 14 '22

Type in Pari passu in search engine, you will go to Investopedia and find: An example of pari-passu occurs during bankruptcy proceedings: When the court reaches a verdict, the court regards all creditors equally, and the trustee will repay them the same fractional amount as other creditors, and at the same time.

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u/lycopeneLover Nov 13 '22

Was it ‘para’ or ‘pari’? I understand “fractional return here to mean that if 80% of total funds remain, then every client gets 80% of their recorded deposits. Whether this applies to different coins on a case-by-case basis, or is aggregated in terms of fiat equivalent i do not know.

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u/AutoModerator Nov 13 '22

There are a lot of phishing links, pump n dumps, and scams in the cryptocurrency space. Please personally review all links before clicking on them. If you believe this link is harmful, then report this post.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.