Two Florida law firms have filed a class action lawsuit in US district court against digital currency exchange Cryptsy and its CEO, Paul Vernon.
Filed in the US District Court for the Southern District of Florida on 13th January, the case alleges negligence, unjust enrichment, conversion and violation of Florida’s Deceptive and Unfair Trade Practices Act. The lawsuit was filed by Jinyao Liu, a Cryptsy customer based in Virginia.
Attorney David Silver told CoinDesk that the new suit grew out of a growing number of complaints that his firm received regarding withdrawals.
In interview, Silver highlighted that Cryptsy is registered with the Financial Crimes Enforcement Network (FinCEN), arguing that the exchange needs to be forthcoming with its customers about site issues.
He told CoinDesk:
The exchange, founded in 2013, offers a number of markets for bitcoin and alternative cryptocurrencies. Customers have complained for months that Cryptsy has withheld their withdrawals for extended periods of time, an issue the exchange has attributed to technical problems.
Vernon did not immediately respond to requests for comment.
According to the complaint, the plaintiff made a deposit on 27th December, and since that date has not received a withdrawal despite repeated requests.
"Plaintiff, on December 27, 2015, deposited 84,000,000 Dodge Coin (a commonly used cryptocurrency) to fund his CRYPTSY account. The value of that deposit, according to CRYPTSY, was approximately 33.6 BTC ($14,100.00 USD)," the filing states.
The complaint claims that withdrawal requests were submitted on the 28th, 29th and 30th of December, as well as 2nd and 8th January, and further claims that the customer has received no funds as of the filing date.
The plaintiff goes on to state that other members of the class are in a similar situation:
According to the filing, the plaintiff is seeking restitution and damages for an unspecified amount, as well as legal fees.
Phishing attack response
Cryptsy later said in a 13th January blog post that an account it uses to issue text messages to customers had been compromised, but claimed that exchange's mailing service had not. The company said it was unsure how the mailing list had been obtained.
The post, attributed to Vernon, said that more details regarding the months of customer withdrawal issues would be forthcoming.
"Regarding other issues that have been apparent at Cryptsy for the last couple months, I will be making another post to explain what has been happening in the next couple days," he wrote.
At press time, the exchange is reporting market trades but a notice states that all withdrawals have been cancelled and remain unavailable.
The full complaint can be found below:
Gavel image via Shutterstock
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.