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Lawsuit Filed Against Coinbase For Alleged Aiding And Abetting Of Theft

By

Los

Silva

WriterETHNews.com

Class action lawsuit filed against cryptocurrency exchange Coinbase.

A lawsuit filed in court on December 15, 2016, alleges that Paul Vernon, former CEO and principal operator of Cryptsy, a money services business, and virtual currency exchange, stole an estimated $8.2 million in customer assets through accounts maintained at Coinbase.

The class action lawsuit asserts that Vernon reported the $8.2 million in funds as a combination of revenue generated from Cryptsy services and his own personal Bitcoin holdings. It also claims that Vernon liquidated both personal and customer assets over a three-year period and that Coinbase aided and abetted the theft. Under the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), Coinbase was mandated to reasonably verify the authenticity of Vernon’s claims of legitimate business revenue and personal ownership. The lawsuit asserts that the former Cryptsy CEO’s claims were untrue and that Coinbase failed to perform the regulatory requirements to verify the suspicious transactions. It is believed that in late 2015 Vernon fled to China after abandoning Cryptsy.  

The class action lawsuit is currently pending in the United States District Court for the Southern District of Florida, case number 9:16-cv-81992. As stated in the complaint, the class of victims pursuing relief includes: 

All CRYPTSY account owners who: (1) deposited Bitcoins, alternative cryptocurrencies, or any other form of monies or currency at CRYPTSY, (2) had such currency liquidated by VERNON and CRYPTSY through COINBASE, and (3) have been denied access to their accounts and funds between May 22, 2014 and the present date. 

The lawsuit asserts claims for aiding and abetting breach of fiduciary duty, aiding and abetting conversion, negligence, and unjust enrichment. The plaintiffs are represented by Silver Law Group and Wites & Kapetan, P.A

Also joining as a plaintiff in the lawsuit is James D. Sallah, Esq., the court-appointed Receiver charged with protecting and retrieving assets belonging to Cryptsy and its customers, including pursuing adjudication against individuals and entities believed to have acted in participation with Vernon. The court documents relevant to Mr. Sallah’s efforts can be found at www.cryptsyreceivership.com and www.silverlaw.com.

Los Silva

Los Silva is a writer and filmmaker who has collaborated with tech and design companies. His interest in Ethereum stems from emerging creative applications that allow artists control of their work through blockchain technology.

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