Silver Law Group and Wites & Kapetan File Class Action Lawsuit Against Coinbase for Aiding and Abetting $8 Million Theft

Boca Raton, Florida – December 15, 2016 (GLOBE NEWSWIRE) – Silver Law Group (www.silverlaw.com) and Wites & Kapetan, P.A. (www.wklawyers.com) have filed a nationwide class action lawsuit in federal court against California-based Money Services Business and cryptocurrency exchange operator Coinbase, Inc.

According to the lawsuit, Paul Vernon — the former CEO and principal operator of a cryptocurrency exchange and Money Services Business known worldwide as Cryptsy — converted approximately $8.2 million in Cryptsy customer assets over a three-year period and liquidated to his own benefit those stolen funds through accounts Mr. Vernon and Cryptsy maintained at Coinbase. As alleged in the lawsuit, Mr. Vernon told Coinbase that the $8.2 million represented either a portion of the revenues Cryptsy had generated from its business or represented Bitcoin that Mr. Vernon himself personally owned. Despite Mr. Vernon’s assertions of business revenue and personal ownership, Coinbase — as a Money Services Business regulated under the FinCEN division of the U.S. Treasury Department — was required to reasonably verify those facts. The lawsuit asserts that Mr. Vernon’s claims were untrue, and Coinbase failed to satisfy its regulatory requirements or perform any reasonable investigation into the suspicious activity in Mr. Vernon’s and Cryptsy’s Coinbase accounts. Although the exact amount remains undetermined, the lawsuit estimates that the value of the digital funds laundered through Coinbase exceeds $8,200,000.00. Mr. Vernon is believed to have absconded with those funds when he abandoned Cryptsy and fled to China in late-2015.

The class action lawsuit is pending in the United States District Court for the Southern District of Florida under Case No. 9:16-cv-81992. As stated in the lawsuit, 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. Also joining as a plaintiff in the lawsuit is James D. Sallah, Esq., the Receiver/Corporate Monitor appointed by the Court to marshal Cryptsy’s assets after Mr. Vernon’s disappearance to China. Among his many responsibilities, Mr. Sallah is charged with protecting and retrieving assets belonging to Cryptsy or its customers, including by pursuing adjudication against those individuals and entities he believes acted in concert or participation with Mr. Vernon. Many of the court documents relevant to the Receiver’s efforts can be found at www.cryptsyreceivership.com or at www.silverlaw.com.

If you have entrusted your cryptocurrency to an exchange or have lost money in alternative investments, you might have the grounds upon which to assert a claim to recover your losses. Silver Law Group is a nationally-recognized securities law firm headquartered in South Florida, with satellite offices in New York and Washington, DC, representing investors worldwide with their claims for losses due to financial misconduct and investment firm negligence in securities litigation and arbitration matters. Likewise, Wites & Kapetan is a South Florida-based firm that has represented Court-appointed trustees, corporations, investors, and shareholders in numerous multi-jurisdictional litigation matters involving securities, commodities, precious metals, asset recovery matters, Ponzi schemes and other investment frauds. The two firms have each successfully recovered multi-million dollar awards for their clients.

To discuss your legal matter, contact David C. Silver toll-free at (800) 975-4345 or by e-mail at dsilver@silverlaw.com.