Class Action Lawsuit Filed Against Digital Currency Exchange Cryptsy

Two Florida law firms have filed a class action lawsuit in US district court against the digital currency exchange Cryptsy and its CEO, Paul Vernon.

AccessTimeIconJan 14, 2016 at 5:45 p.m. UTC
Updated Sep 11, 2021 at 12:05 p.m. UTC

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.

Liu, in addition to other members of the class, is being represented by Wites & Kapetan, PA and the Silver Law Group, the latter of which filed suit in state court on behalf of a Cryptsy customer last year. That case was later settled, according to the firm.

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:

"As a FinCEN member, you have certain obligations, and those obligations require you to communicate with your customers. And here, customers don't know why they are being denied access to their money."

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.

Case details

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:

"Plaintiff’s experience with CRYPTSY is not unique. CRYPTSY has refused to honor the requests of other members of the Class, who have likewise requested to liquidate or transfer their account balances to other Money Service Businesses, only to have those requests met with silence."

According to the filing, the plaintiff is seeking restitution and damages for an unspecified amount, as well as legal fees.

Phishing attack response

The filing of the lawsuit comes amid continued problems for the exchange. In recent days, the exchange has moved to suspend trading, most recently in response to a reported customer phishing attack.

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


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