The class action lawsuit filed against Bitcoin exchange Cryptsy has just been updated with the name of one more defendant.
The updated lawsuit filed by Silver Law Group (SLG) and Wites Kapetan names Lorie Ann Nettles – Paul Vernon’s former wife – as the new defendant. It says that both the individuals, who operated an online business for public to trade and exchange Bitcoin and similar cryptocurrencies, prevented customers from accessing around $USD5 million worth of assets. Instead, the defendants misused these funds for their own business and personal use, including the cash purchase of a $USD1 million worth waterfront villa in West Palm Beach, Florida.
The lawsuit goes on accusing that Vernon and Nettles took part in a deceptive marriage resolution to improperly transfer the said villa’s ownership to Nettles. The marriage dissolution, according to the available court documents, was concluded within four months.
The accusations made in the lawsuit has brought Vernon and Nettles under the purview of multiple criminal charges, including Claims for Negligence, Conversion of Funds and Property, Violation of Florida’s Deceptive and Unfair Trade Practice Act, and Unjust Enrichment.
“The class action lawsuit is pending in the United States District Court for the Southern District of Florida under Case No. 9:16-cv-80060,” SLG confirmed via mail.
A Look into Cryptsy’s Past
Cryptsy was launched in 2013 under the flag of Project Investors Inc, owned and operated by Paul Vernon. The new Bitcoin exchange later registered itself with the Financial Crimes Enforcement Network (FinCEN) as a “Money Services Business”, which legitimately enabled it to solicit public to register, deposit and trade bitcoin and other digital currencies for fiat.
In May 2015, Cryptsy reported on its blogpost that millions of dollars in customers’ funds were disappeared from its online wallets. During the same time, many customers and media outlets accused Cryptsy of not complying with the FinCEN regulations after discovering that it never filed a Suspicious Activity Report with the regulators after the “alleged theft” of $USD5 million.
Sometime around November 2015, many of Cryptsy customers reported of difficulties in withdrawing funds from Cryptsy accounts. Vernon however blamed it on a “server failure” and assured the issue will be resolved. In another tweet, he said the official website www.cryptsy.com had faced a DDOS attack.
Two days after the commencement of lawsuit — on January 15th 2016 — Cryptsy admitted on its blog that it had concealed facts regarding the insolvency of $USD5 million from customers and regulators. The exchange also admitted that it had lied to customers about the nature of the problems all this time. Vernon however tried to reason with customers, saying that he didn’t want to cause any panic. He also sought help from the Bitcoin community to recover the lost funds.
Readers can access the full copy of the lawsuit here.
Source: Mail Tip