Judge Reopens Cryptsy Customer Class Action Against Coinbase

A U.S district judge has reopened a case involving cryptocurrency startup Coinbase and the now-defunct exchange service Cryptsy. 

Jun 5, 2018 at 9:56 p.m. UTC
Updated Sep 13, 2021 at 8:01 a.m. UTC

A judge in the U.S. District Court for the Southern District of Florida has reopened a case involving cryptocurrency startup Coinbase and the now-defunct exchange service Cryptsy.

Cryptsy collapsed in early 2016 amid allegations of fraud and mismanagement and claims that it had been hacked and subsequently drained of its funds. That decline – preceded by months of growing complaints about withdrawals and access to customer money – sparked a class action lawsuit that ultimately led to an $8.2 million judgment against Cryptsy's CEO, Paul Vernon.

In December 2016, a lawsuit was filed against Coinbase by the Cryptsy class-action investors, alleging that Coinbase should have prevented Vernon from funneling their money through the startup's service.

Coinbase sough to argue that those customers are bound by the arbitration agreement Vernon signed, but US District Judge Kenneth Marra – who is overseeing the case in Florida – disagreed. Two other appellate courts subsequently sided against Coinbase, leading to Marra's June 4 order to reopen.

The plaintiff's motion to reopen the case indicated that Coinbase did not oppose the move.

"Prior to filing this Motion, the undersigned counsel conferred with Defendant's counsel, and has been authorized to represent that Defendant does not oppose the relief sought herein," the document states.

On June 1, both the plaintiffs' and defendant's counsel held a case management conference via phone and will submit a report and proposed schedule order before the end of the week.

Read the full motion to reopen the case here:

Reopen Motion by CoinDesk on Scribd

Justice image via Shutterstock

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