Cryptsy Hit with Class Action Lawsuit for Holding Captive $5M

Big Vern also released an update on the details of the phishing attempt that Cryptsy is investigating and a comment

As if Big Vern needed any more trouble with the cyberattack he’s investigating, Cryptsy now faces a challenge to defend its behaviour in front of a court. On Wednesday, American law firms Silver Law Group and Wites & Kapetan, P.A. filed a nationwide class action lawsuit in a U.S federal court against the Florida-based cryptocurrency exchange and its head, Paul Vernon, according to court documents seen by Finance Magnates.

The lawsuit details that over the past several months, numerous Cryptsy account holders have been denied access to their accounts and were unable to withdraw any and all forms of currency from them. Further it says that despite repeated inquiries to Cryptsy, users are being left without any meaningful response or information from Cryptsy and have had their withdrawal demands either denied or tabbed as “pending” for days, weeks, or even months.

Although the exact amount has yet to be calculated, the law firms say they believe, that the value of the digital funds being held captive at Cryptsy exceeds five million dollars.

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The plaintiff in the case is Jinyao Liu, an individual from Fairfax County, Virginia and the class of victims on whose behalf he is pursuing justice includes: “All Cryptsy account owners who deposited Bitcoins, alternative cryptocurrencies, or any other form of monies or currency at Cryptsy and have been denied access to their accounts and funds between November 1, 2015 and the present date.” The lawsuit asserts claims for negligence, unjust enrichment, conversion of funds and property, and violations of Florida’s Deceptive and Unfair Trade Practices Act.

Scam Refund

With all the criticism about him not responding to the withdrawal issues claims, Big Vern at least issued an update on the details of the phishing attempt that Cryptsy is investigating. A system notice on the site now explains there is a phishing attempt going around prompting users to go to a Cryptsy-refund website.

There were two avenues for the phishing attempt, one via SMS: “using our provider Twilio and gained entry into our logs and sending ability via a weak password on that account. The passwords on this account have been secured.” The other avenue was via email using the exchange’s mailing service (Mailgun), but was not sent using its account. “It is uncertain where the email list for this Phishing attempt was attained from, as we do not show any unauthorized access to our Mailgun account nor our internal systems.”

“Regarding other issues that have been apparent at Cryptsy for the last couple months, I will be making another post to explain what has been happening in the next couple days. Until we are able to determine the extent of the phishing attempt, all withdrawals are paused and will be cancelled before they are brought back live…..BigVern”

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