{"id":1630,"date":"2022-01-28T09:04:00","date_gmt":"2022-01-28T14:04:00","guid":{"rendered":"https:\/\/www.silvermillerlaw.com\/?p=1630"},"modified":"2024-04-15T16:33:17","modified_gmt":"2024-04-15T16:33:17","slug":"feds-cryptsy-founder-stole-more-than-a-million-dollars-in-users-cryptocurrency","status":"publish","type":"news_posts","link":"https:\/\/www.silvermillerlaw.com\/press\/in-the-news\/feds-cryptsy-founder-stole-more-than-a-million-dollars-in-users-cryptocurrency\/","title":{"rendered":"Feds: Cryptsy Founder Stole More Than a Million Dollars in Users’ Cryptocurrency"},"content":{"rendered":"
Roughly six years after the founder of the now-defunct Bitcoin exchange company Cryptsy denied accusations that he had stolen\u00a0millions of dollars in cryptocurrency\u00a0<\/a>that suddenly vanished from users’ wallets,\u00a0an unsealed federal indictment has charged the former Delray Beach man\u00a0with doing precisely that.<\/p>\n Paul “Big Vern” Vernon, 48, is charged with a slew of crimes tied to\u00a0the\u00a0disappearance of more than $5 million in Bitcoin and Litecoin<\/a>, according to the 17-page indictment that was filed in August 2019 and unsealed Wednesday. Federal authorities say Vernon orchestrated a “sophisticated theft scheme”\u00a0between 2013 and 2015,\u00a0in which he stole more than a million dollars worth of users\u2019 digital funds on the exchange, deposited them to his personal wallet, and then transferred the funds to his personal bank account, and later destroyed the evidence. He is also accused of evading federal income tax in 2014 and 2015.<\/p>\n All but one of the 17 charges against Vernon carry maximum prison sentences of 20 years, according to the indictment, which has been embedded at the end of this article.<\/p>\n Vernon, who was\u00a0deemed a fugitive<\/a>\u00a0in 2019,\u00a0did not respond to\u00a0New Times<\/i>‘ emailed request for comment.<\/p>\n <\/p>\n New Times<\/i>\u00a0previously\u00a0chronicled<\/a>\u00a0Crypsty’s downfall in “Cryptsy Founder Paul Vernon Disappeared, Along With Millions of His Customers’ Cash” published in June 2016, six months after the company\u00a0abruptly shut down and\u00a0left users without a way to withdraw their digital currencies<\/a>. Vernon was tech-savvy,\u00a0 ambitious, and an early Bitcoin adopter. He had started a few companies \u2014 including a website-hosting company specializing in high-bandwidth pornography sites, and an early Netflix competitor that packaged and mailed DVDs \u2014 before launching Cryptsy, an exchange that allowed users to trade Bitcoin with a number of other altcoins, in May of 2013. By November 2013, Vernon\u00a0told the\u00a0Wall Street Journal<\/i>\u00a0<\/a>his exchange was handling 33,000 trades per day.<\/p>\n But the following year, dozens of Cryptsy users began complaining about having trouble accessing their funds. A\u00a0customer who had lost 140 Bitcoins in a security breach sued Vernon for fraudulent business practices.\u00a0On July 29, 2014, Vernon told employees that the company had been hacked and millions in cryptocurrency had been stolen.\u00a0When Vernon informed Cryptsy’s users about the hack more than a year later, many were left feeling bamboozled since it was around this time that Vernon had fled to China.\u00a0According to his ex-wife, he went there with a girlfriend he had been hiding for nearly a year.<\/p>\n In a\u00a02016 email interview with\u00a0New Times<\/i><\/a>, Vernon said he regretted not sounding the alarm earlier about the hack. At the time, he declined to say whether he had ever used or diverted his users’ funds for personal use.<\/p>\n “The plan was to use a portion of revenue to replenish the wallets. However, diminishing Bitcoin price and volume turned out to not go in our favor,” Vernon\u00a0told\u00a0New Times<\/i><\/a>. “At the time, I had two choices, disclose and shut down or try to continue running and reacquire user funds. Because we were doing well at the time, I attempted option #2.”<\/p>\n According to the indictment, Vernon had “falsely and fraudulently” posted on the former Cryptsy blog that the company “strived for transparency and doing what is right.” He “caused cryptocurrency investors to trust the safety of Cryptsy for storing and trading their virtual currency.”<\/p>\nRELATED STORIES<\/h3>\n
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