Additional compensation available for Cryptsy victims, court notice says
Last week, some former users of the now-defunct cryptocurrency exchange Cryptsy received a notice informing them of a new turn in the ongoing class settlement process. Authorized by the U.S. District Court for the Southern District of Florida, the document states that those who were defrauded in the 2016 collapse of the digital finance platform may be entitled to receive money from additional recovery.
Cryptsy was a crypto exchange that went bust in January 2016 following months of user-reported issues with withdrawing funds from the platform. The court later found that Cryptsy founder Paul Vernon had stolen millions of dollars’ worth of customers’ digital assets before fleeing to China. Later that year, a group of the exchange’s users initiated a class action against the company and its founder, while what was left of Cryptsy went into receivership.
The court-appointed receiver began to liquidate various assets associated with the defunct company, amassing some $1.5 million by June 2017 to be distributed between the victims.
The receiver and class representative then brought an additional lawsuit against Coinbase, which they alleged to have aided and abetted Vernon’s conduct by allowing him to convert the stolen funds to U.S. dollars. Almost three years of litigation ended in a class action settlement as Coinbase agreed in Jan 2020 to pay out almost a $1 million to defrauded Cryptsy account holders.
The most recent notice pertains to yet another round of the swindled funds’ recovery. Legal action against Xiuxia Liu, Paul Vernon’s girlfriend, resulted in the victims’ representatives securing an additional $875.000 on behalf of the class.
The funds will be distributed proportionally among those who had filed valid claims in the two previous settlements, or who have submitted a valid claim in the Liu settlement by January 12, 2022. Payments are expected to start going out on or before Feb. 20, 2022 according to the notice.