Coinbase Faces Class Action Lawsuit From Cryptsy’s Victims

Gautham

Last Updated: October 7, 2020 11:29 am

2 mins read

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Coinbase is courting one trouble after another. Following the latest issue with the IRS, the cryptocurrency company has another legal challenge to face. This time, it is a class action lawsuit by Silver Law Group and Wites & Kapetan regarding the platform’s alleged involvement in $8 Million theft by Cryptsy’s promoter Paul Vernon.

The nationwide class action lawsuit against Coinbase has been filed in the United States District Court for the Southern District of Florida. According to reports, Coinbase failed to conduct proper due diligence when it came to funds deposited by Paul Vernon on the platform.The plaintiffs believe that it may have helped him steal a significant portion of funds which rightfully belonged to Cryptsy’s investors — the now defunct cryptocurrency exchange.

Both law firms — Silver Law Group and Wites & Kapetan, P.A have alleged that Coinbase has aided and abetted in the theft of about $8.2 million in Cryptsy’s customer assets over a period of 3 years. Paul Vernon is said to have used Coinbase to liquidate the assets after claiming it to be a combination of his own assets and a portion of Cryptsy’s assets. Coinbase apparently failed to reasonably verify the claims, which it should have done as a FinCEN regulated Money Services Business.

Following the lawsuit involving —

“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 law firms have issued a press release calling for the victims of Cryptsy or similar cryptocurrency related incidents who have lost their money or assets to pursue legal action.

At present, there are no indications of any deliberate wrongdoings on Coinbase’s part in the Cryptsy’s case. However, if the court does find Coinbase to be guilty of negligence or its willing participation in the scam, then the plaintiffs may stand a chance to receive damages and use it towards settling at least a portion of losses incurred by Cryptsy’s investors.