Cryptocurrency Exchange Cryptsy and Owner Paul Vernon Face Lawsuit

cryptsy lawsuitSkye Bonnow is an altcoin trader that had 140 BTC swiped from his Cryptsy account in January of 2014. Skye maintains that he adhered to Cryptsy’s Terms and Conditions and was still utterly defrauded of his bitcoins.

The lawsuit is currently seeking the maximum damages for the lost coins: treble the amount of the current usd value, or $180,000. Skye is using Silver Law Group to bring his claims against Paul Vernon and Cryptsy, who operate as PROJECT INVESTORS, INC.

Also read: Cryptsy in Disarray

The Cryptsy Hack

Earlier this year, certain users started to notice that they could withdraw more than they had as a positive balance in their accounts. This pointed to a clear issue in Cryptsy’s internal wallet management systems since successful transfers out of their system meant that customer funds were certainly being mixed. The general suspicion was that the extra funds withdrawn by the “hackers” of Cryptsy came from users. Usually, such hacks occur as a result of insecure emails and passwords as well as lack of two-factor authentication. What this lawsuit does is emphasize that this was not the case in the previous Cryptsy hack. The Lawsuit claims:

Contrary to the claims promoted on the Cryptsy website, the website platform was not a secure online cryptocurrency trading platform, but instead was rife with developmental bugs, security issues, lack of protection against fraud, and operated as a general slush co-mingled account for Defendants to later misappropriate funds for its own use.

Paul Vernon and Cryptsy have not answered Skye about his lost money, and now legal action is being sought by the Floridian resident against the Floridian company, launched by a Floridian law firm. Cryptsy has continued operating after the hack, and even has USD markets now.

The Silver Law Group is also pursuing a lawsuit against Trendon Shavers and Bitcoin Savings & Trust, who has previously been handed judgement by the SEC. It is unclear where the money to pay out that lawsuit, since guilt has been established, will come from.

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