Coinbase Hands Nearly $1M to Cryptsy Victims After Settling Class Action Lawsuit

Coinbase will fork over $962,500 after settling a class action lawsuit which alleged Cryptsy founder Paul Vernon used the U.S. exchange to launder his victims' funds.

Jan 13, 2020 at 3:28 p.m. UTC
Updated Sep 13, 2021 at 12:07 p.m. UTC

Coinbase has settled a class action lawsuit brought by users of the former Cryptsy cryptocurrency exchange.

According to a set of court documents dated Nov. 27 and Dec. 10, 2019, Coinbase has agreed to turn $962,500 over to an escrow agent responsible for handling class action claims related to a previous lawsuit against Cryptsy. Lawyers for the plaintiffs, who announced the settlement Monday, have already won 11,325 BTC from this previous case.

The plaintiffs created a webpage for potential Cryptsy victims – any individuals who used the exchange before 2015 – listing upcoming key dates and outlining how they can submit claims.

The settlement concludes a three-year legal action that nearly saw a jury trial.

A hearing will be held on April 17, 2020, to either approve the preliminary settlement agreement or add further modifications as needed, according to the filing.

Brandon Leidel, designated the class representative in the class action lawsuit, will receive $2,500 due to his efforts. He brought the suit in 2016 alleging Cryptsy CEO Paul Vernon used the exchange to launder millions of dollars' worth of user funds over a multi-year period.

The case was originally filed by the Silver Miller law firm and Wites Law Firm, both of which were designated class counsel. In a statement, attorney Marc Wites said the case against Coinbase, as well as the previous lawsuit filed against Cryptsy, "were difficult cases" to resolve.

"When companies go out of business, founders flee the country and the amount at issue is relatively small, most plaintiff law firms would decline to pursue the case," he said. "We were the only lawyers in the country to pursue a case against Cryptsy or Coinbase, individually or as a class action, and we were able to obtain multiple meaningful recoveries for victims who would have otherwise been left without any recourse."

David Silver of Silver Miller said he commended Coinbase "for stepping up and resolving" the case. The Cryptsy case shows how early exchanges, "especially unregulated exchanges like Cryptsy, shunned regulators, laws and ultimately stole from its own clientele," he said.

"This case shows that businesses in the cryptosphere bear a large measure of responsibility, from with whom they decide to do business and with whom they choose to associate," he said.

Coinbase did not immediately return a request for comment.

Read the preliminary settlement below:

Read the judge's order below:

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
Bitcoin Rises to $30K; Resistance at $35K

BTC is on track to register a positive momentum signal on the daily chart.

BTC is on track to register a positive momentum signal on the daily chart.

2
What Web 3 Means to Andreessen Horowitz

And what the venture capital firm's "State of Crypto" report means for you.

And what the venture capital firm's "State of Crypto" report means for you.

3
Nansen Acquires DeFi Portfolio Tracker Ape Board for More Than $10M

Nansen plans to combine its analytics with Ape Board's portfolio tracking to make the "definitive information super app of Web 3."

Nansen plans to combine its analytics with Ape Board's portfolio tracking to make the "definitive information super app of Web 3."

4
Terraform's Legal Team Quits Amid Terra Stablecoin Fallout

Marc Goldich, Lawrence Florio and Noah Axler left the Terra ecosystem backer in May, according to their LinkedIn profiles.

Marc Goldich, Lawrence Florio and Noah Axler left the Terra ecosystem backer in May, according to their LinkedIn profiles.