ROFL: Cryptsy offers bounty for the return of “stolen” Bitcoin in latest …


Just when it was thought the saga of failed Bitcoin exchange Cryptsy (Project Investors, Inc.) couldn’t get any more absurd, it has, with the founder of the company offering a reward to a hacker who is alleged to have stolen funds from the exchange.

Founder and Chief Executive Officer Paul “Big Vern” Vernon has posted a contract (pdf) titled “Cryptsy Recovery Bounty Final” on the Cryptsy website that promises to pay 1750 Bitcoin ($725,000) to “Cryptcracker,” the alleged hacker of 13,000 Bitcoin ($5.38 million) from the site should he or she return them.

The contract (we use the term loosely) also promises a further reward of 250 Bitcoin ($103,000) should the 247,000 Litecoins ($817,600) allegedly stolen be returned as well.

Vernon claimed in January that trojan malware was inserted into Cryptsy’s code by the developer of Lucky7Coin giving access to the company’s wallets, but more remarkably claimed this had occurred 18 months prior in 2014. Instead of letting customers know what had happened, they had decided to continue trading in an effort to work their way back to solvency. Even more funnily, Vernon claims to have never reported the theft to authorities, as he didn’t know to whom to report it.

Since that announcement it has since been all but confirmed that the hacking story is a complete lie, with a copy of an affidavit Vernon made to a Florida divorce court in December being revealed where he stated under oath that the exchange had been able to stay afloat thanks to fee income, but that profits had dried up, leading to the exchange’s collapse.

In his own words:

“Due to downturn in profits, not currently taking a salary, expect corporation to dissolve due to economic conditions.”

Vernon, and his now ex-wife are currently subject to a class-action lawsuit that suggests that the alleged hack is nothing more than a poorly masked ploy of their efforts to move assets away from Cryptsy before the company officially went under; of particular note, and despite the alleged hack taking place in 2014, Vernon made an all-cash purchase of a $1,374,881 waterfront mansion in Palm Beach County, Florida, in May 2015.


Even if we pretend to believe Vernon’s claim that the site was hacked, the bounty contract is nothing more than pure theatrics because it’s highly unlikely the contract would be valid to begin with, particularly when the person to whom the “bounty” was being offered isn’t even listed properly on the contract to begin with. Cryptcracker may be a pseudonym for a group, not an individual, and even then, if they had stolen the funds, why would they want to return them? After all, it’s not as if Big Vern has reported the theft to authorities.

Perhaps what’s also a little sadder in this absurd tale is that many members of the Bitcoin press are taking this offer seriously without even the slightest bit of investigation into the background, with one actually going as far as writing:

One silver lining to the whole episode is that if this all goes well then the funds will actually be back in Cryptosy’s posession [sic]. So it’s good that the customers will get their money back, that is the most important [sic].

ROFL, it’s not going to happen.

If you’ve been a victim of Paul Vernon’s Cryptsy Bitcoin exchange scam and haven’t joined the class action lawsuit yet, contact the good folks at Wites Kapetan, P.A. and get you name added to it.

Image credit: svenstorm/Flickr/CC by 2.0
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Duncan Riley

Duncan Riley

Duncan Riley is a senior writer at SiliconANGLE covering Startups, Bitcoin, and the Internet of Things.

Duncan is a co-founder of VC funded media company B5Media and founder of news site The Inquisitr, and was a senior writer at TechCrunch in its earlier days.

Tips? Press releases? Intersting startup? email: [email protected] or contact Duncan on Twitter @duncanriley

Duncan Riley


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