Class-action lawsuit against bitcoin exchange Cryptsy escalates

The Silver Law Group (SLG) and Wites & Kapetan LLP escalated their lawsuit, naming Cryptsy executive Paul Vernon and his wife Lorie Ann Nettles as defendants.

The class-action lawsuit against bitcoin exchange Cryptsy just got upgraded with the addition of new defendants.

Silver Law Group (SLG) and Wites & Kapetan LLP upgraded the lawsuit to include Paul Vernon’s wife, Lorie Ann Nettles, as a new defendant. They are said to have engaged in online business activities that traded and exchanged Bitcoin and other similar cryptocurrencies, causing customers to lose assets worth $5 million. The defendants misused the funds and used them to develop their own businesses and personal life, including the purchase of a $1 million beachfront villa in West Palm Beach, Florida, with cash.

The lawsuit also alleges that Vernon and Nettles used a fraudulent marriage resolution to transfer ownership of the beach house to Nettles' name. Their marriage ended within four months, according to court documents.

Vernon and Nettles face multiple criminal charges in the lawsuit, including claims of negligence, illegal transfer of funds and property, violations of the Florida Deceptive and Unfair Trade Practices Act and unjust enrichment.

"The class action lawsuit is currently pending in the United States District Court for the Southern District of Florida, case number No. 9:16-cv-80060," according to the results confirmed by SLG via email.

Looking back at Cryptsy’s past

Cryptsy was founded in 2013 under the umbrella of Project Investors Inc., owned and operated by Paul Vernon. The new Bitcoin company then registered with FinCEN as a “fund services company,” which allowed it to obtain a license to solicit the public to register, store and trade Bitcoin and other digital currencies.

In May 2015, Cryptsy reported in a blog post that millions of dollars in customer funds had disappeared from online wallets. At the same time, Cryptsy had never filed a suspicious transaction report with regulators after being suspected of stealing $5 million, so many customers and news media accused Cryptsy of not complying with FinCEN regulations.

Around November 2015, many Cryptsy customers reported that they were unable to withdraw funds from their Cryptsy accounts. However, Vernon blamed the problem on a "server glitch" and assured that the issue would be fixed. In another tweet, he said that the company's website www.cryptsy.com had been hit by a DDOS attack.

Two days after the lawsuit was filed, on January 15, 2016, Cryptsy admitted in a blog post that they had concealed from customers and regulators the fact that they were unable to repay $5 million. The exchange also admitted that they had been deceiving customers about the nature of the problem. However, Vernon tried to reason with customers, saying that he did not want to cause any panic. He also sought help from the Bitcoin community to recover the lost funds.

Original article: http://www.newsbtc.com/2016/02/25/bitcoin-exchange-cryptsy-slammed-with-class-action-lawsuit
Author: Gola Yashu
Compiled by: Kyle
Source (translation): Babbitt Information ( http://www.8btc.com/cryptsy-bitcoin-class-action-lawsuit ‎)