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Concerns Mount Amid Issues at Digital Currency Exchange Cryptsy

| Published on January 12, 2016 at 18:38 BST
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UPDATE (13th January 05:04 BST): Cryptsy has posted a notice on its website stating that it has suspended withdrawals and trading following what it described as an "attack". The move comes amid reports on social media of a phishing attack that targeted customer email accounts and cell phone numbers.


question markThe controversy surrounding the digital currency exchange Cryptsy has shown little sign of abating amid problems with customer withdrawals, allegations of fraud and mismanagement, user frustration and a lack of clarity from the exchange.

Founded in 2013, Cryptsy is a digital currency exchange that lists bitcoin and a variety of alternative cryptocurrencies, or altcoins, and for months, customers of the exchange have voiced concerns about delayed withdrawal requests. Some customers claim that their funds have been unavailable for weeks or more at a time.

Many of these complaints have filtered throughout social media, sparking speculation that the exchange is set to follow in the footsteps of Mt Gox, the Japanese bitcoin exchange that shut its doors and later declared bankruptcy after potentially losing hundreds of millions of dollars in customer funds.

In some instances, according to testimonials from Cryptsy customers, withdrawals have been successfully made in lower-volume altcoins – a move that has reportedly resulted in disparate prices between exchanges and may have resulted in Cryptsy being removed from exchange-oriented services like Coinmarketcap.

At this time, it is unclear how much money is being held by the exchange or the total amount of outstanding withdrawal requests, though some have speculated that the amount may be in the millions of dollars.

Services cut ties

In light of the problems, some cryptocurrency services are moving to sever ties with Cryptsy, citing both the problems with withdrawals as well as problematic exchange rates.

As reported last week, digital currency pricing website Coinmarketcap moved to delist Cryptsy amid the ongoing issues. At press time, the exchange remains unlisted on the site.

Altcoin mining pool service Multipool.us announced on 4th January that it was suspending its auto-deposit integration with Cryptsy.

The site said in a statement at the time:

"We have attempted several times now to contact Cryptsy to get a status on BTC/LTC withdrawals but have received no response. According to reports from our users and users on other sites, it appears that Cryptsy has not processed BTC or LTC withdrawals in over a month. Other currencies may be working but are now highly inflated on Cryptsy."

"We consider Cryptsy to be a defunct exchange and recommend our users avoid it," the message continued.

More recently, cryptocurrency trading software developer Coinigy announced that it would remove the exchange from one of its pricing tools.

Offices vacated

Last week, bitcoin news site Bitcoinist reported that the offices of Project Investors, Inc. – one of the firms tied to the exchange – had been vacated.

According to the media outlet, an anonymous source had learned that Project Investors left the building at 160 Congress Drive, Delray Beach, Florida.

When reached for comment, a representative for Cohen Commercial Management, the property's management firm, confirmed that Project Investors had departed the premises. According to the representative, the company left about a month ago.

A Cryptsy support staffer reportedly told customers in the exchange's online chatroom that the move was planned and is aimed at "cutting expenses".

The actions come amid divorce proceedings involving Vernon that cite Project Investors and other entities owned or controlled by Vernon as a third-party defendant.

Unconfirmed reports have also alleged evidence that the exchange is being investigated by the US government.

Cryptsy has not responded to requests for comment.

Question mark image via Shutterstock

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