View source for Cryptsy Withdrawals Closed/Bankruptcy

{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/cryptsywithdrawalsclosedbankruptcy.php}}

[[File:Cryptsy.jpg|thumb|Cryptsy]]Cryptsy was once one of the leading platforms in the United States, allowing users to trade over 200 different cryptocurrencies. It was reportedly started as a hobby project in 2013, before growing rapidly.

On July 29th, 2014, Cryptsy fell victim to an attack by installing a malicious wallet for one of the coins "Lucky7Coin", providing a backdoor to their exchange that an attacker was able to use to withdraw the entirety of their wallet which contained customer funds. 13,000 bitcoin and 300,000 litecoin were reportedly taken from the platform, though the blockchain reports slightly less (11,325.0965 BTC and 247,507.99 LTC). The platform continued to operate without notifying customers any breach had occurred.

The coins were split into separate wallets with a balance of 1,000 bitcoin each, and stayed idle all the way until 2022. In March 2015, Paul Vernon and his wife purchased a large home in Florida.

On October 4th, 2015, an article was published by CoinFire alleging investigations into the Cryptsy platform by several government agencies. The accusations included that the platform may have been used to launder funds or finance terrorism, that some of the team members may have had interactions with some fraudulent projects, and that markets on the exchange were being manipulated. At the time, nothing was publicly available from any agency, and it's unclear who is behind the CoinFire article. Most users appeared to defend the exchange platform at the time, however there were definite signs of withdrawals happening triggered directly from the article. On their blog, Cryptsy denied some of the allegations but failed to deny others. They clarified further in other interviews about many of the allegations.

The day after the article, one of the customer of the platform tried to withdraw 76 bitcoin. They were left with no withdrawal and minimal response for the next month, before they started to share what was happening on social media, triggering a further panic.

Within a couple of months, withdrawals shut down on the platform entirely, blamed on a wide variety of circumstances such as temporary maintenance, a DDOS attack, and eventually an ongoing phishing attack, but later clarified as being based on the platform being insolvent. There were reports of withdrawals reopening briefly, but it's unclear whether that happened or not. The platform was insolvent by January of 2016.

Clients of the platform filed charged against Paul Vernon as CEO, over his alleged negligence, unjust enrichment, conversion, and violation of Florida’s Deceptive and Unfair Trade Practices Act. A class-action was also filed in August of 2016.

Settlements were reached with Lori Nettles as well as a couple of contractors who had done work for the Cryptsy platform. Coinbase was also sued for an alleged role in helping to launder the funds, which was settled for ~$1m.

It appears that on March 29th, 2022, the balances on the theft accounts were split up further. No funds have been recovered from Paul Vernon nor from the hacker.

This exchange or platform is based in United States, or the incident targeted people primarily in United States.

== About Cryptsy ==
"Cryptsy was a US based crypto exchange and one of the most popular at that with a clear and easy to used interface specifically for trading crypto to crypto - for example dogecoin for litecoin. In this respect, Cryptsy was one of the leading crypto exchanges out there."

Paul "Vernon was tech-savvy, ambitious, and an early Bitcoin adopter. He had started a few companies — including a website-hosting company specializing in high-bandwidth pornography sites, and an early Netflix competitor that packaged and mailed DVDs — before launching Cryptsy, an exchange that allowed users to trade Bitcoin with a number of other altcoins, in May of 2013."

"Cryptsy was created as a hobby, because I was running around 25 different altcoin pools, from litecoin to Mintcoin to Feathercoin and many other coins; I just can’t name them all; I had too many different pools and there wasn’t a place where you can go and exchange all of them."

"2-3 weeks later, I hammered out most of the bugs that I found and started to get more and more sign-ups and these were people who were coming from elsewhere i.e. they weren’t coming from my pools and that was around May 2013, when I officially launched the site. I ran that for a while, just as a hobby for a few months and it started picking up more and more users, approximately 200-300 new users a day, and I wasn’t doing any kind of advertising and I still don’t do any kind of advertising."

"[A]round August 2013 is when I started considering that may be I should make Cryptsy my full time job, I opened up a small office here in Florida, hired my first employee, who was my accountant, because of all the trading activity that started going on, I knew I needed somebody to keep track of all these numbers, so that was the first hire and then by October, I had left my job and started working for Cryptsy full time and by the end of that year, I probably had 4-5 employers working and I don’t know if you remember, but by November 2013, there was a huge explosion in trading, across all exchanges, not only on Cryptsy, but all, so that was a crazy month."

"I am not going to tell you all details [about our security] because this is classified info, but we have a lot of different layers. We use Incapsula, our DDoS protection provider, which is our first security layer and then, we have frontend web servers, which is our second security layer, and all of those have firewalls and all of our online databases are backened, so the rest of the services , servers and other stuff aren’t accessible from the public internet, which is a key strategy when trying to boost security as the best way to be secure is not to plug in to the internet. Our wallets have several security layers and they are really hard to get into even for me, so wallets’ security is a priority especially when you have a couple of hundred altcoins on the platform."

"The Company started offering fiat to Bitcoin and other altcoin pairs in 2014. The process of depositing and withdrawing fiat currency can take time as they use a variety of providers such as Interac and EgoPay, where other exchanges offer more simplistic methods to get any fiat currency into bitcoin. Initially, you could pay by cheque to the Company so the electronic transfer was a welcome change."

"The exchange had a rebate program as well as a tiered fee structure that changes with respect to your 14-day average volume. With the maximum discount in place, your trading fees were as low as 0.1% or as high as 0.33%. Internal transfers to other users were free of charge but withdrawals came with a standard industry surcharge."

"Cryptsy is a Belize corporation as we have multiple corporations; we have a Canadian corporation and I think we have a corporation elsewhere as well, so Cryptsy, the exchange website itself, is by the Belize corporation and we have a licensing agreement between the US corporation, Project Investors Inc., and Cryptsy Inc. the Belize corporation which grants Project Investors Inc. 100% of the profits that Cryptsy Belize Inc. generates, so it is kind of a separation that keeps Cryptsy itself out of the US, while still kind of being in the US, because it is managed by the US corporation."

"We have 322,000 users at the moment; of those 50,000-200,000 are active but it depends on how you classify someone is an “active trader”."

"Lucky7Coin (LK7) [was] a PoW/PoS coin in the family of PPCoin/Novacoin with latest available algorithms that fixed various problems in the recent PoW/PoS coins. As compared to the PoW only coins, the proof of stake coins are more resilient to 51% attack. Also it is a long term energy-efficient cryptocurrency." "[O]n 5/22/2014, [the Cryptsy platform] received [a] message from the new developer who wanted to maintain the codebase."

"Lucky7Coin is not maintained and I would like to take care of it. I have announced that on bitcointalk.org in Lucky7Coin thread. You’re the only exchange for this coin and I hope you will let me take care of it. I’m responsible. You don’t have to be afraid of errors or forks. I’m developing multipool and I know bitcoin internals and protocol."

"Branch “master” will always be for stable version, branch “devel” could be dirty. In a 2-3 weeks I’ll release new version with p2pool support and checkpoints. Before that I’ll contact you to check few blocks hashes for checkpoints and make sure there is no fork."

"[W]e were alerted in the early AM of a reduction in our safe/cold wallet balances of Bitcoin and Litecoin, as well as a couple other smaller cryptocurrencies." "2014-07-29 13:17:36 is when the event occurred." "After a period of time of investigation it was found that the developer of Lucky7Coin had placed an IRC backdoor into the code of wallet, which allowed it to act as a sort of a Trojan, or command and control unit.   This Trojan had likely been there for months before it was able to collect enough information to perform the attack."

"Some may ask why we didn’t report this to the authorities when this occurred, and the answer is that we just didn’t know what happened, didn’t want to cause panic, and were unsure who exactly we should be contacting.   At one time we had a open communication with Secret Service Agent Shaun Bridges on an unrelated matter, but I think we all know what happened with him – so he was no longer somebody we could report this to. Recently I attempted to contact the Miami FBI office to report this, but they instead directed me to report it on the I3C website.  I’ve not heard anything from them."

"This of course was a critical event for Cryptsy, however at the time the website was earning more than it was spending and we still have some reserves of those cryptocurrencies on hand.   The decision was made to pull from our profits to fill these wallets back up over time, thus attempting to avert complete closure of the website at that time.   This worked fine for awhile, as profits decreased due to low volume and low Bitcoin prices, we would adjust our spending accordingly.  It wasn’t until an article from Coinfire came out that contained many false accusations that things began to crumble.   The article basically caused a bank-run, and since we only had so much in reserves for those currencies problems began."

"Nettles, whose name is now listed among the defendants with Vernon and Cryptsy, divorced from Vernon a few months after they made an all-cash purchase of a $1,374,881 waterfront mansion in Palm Beach County, Florida in March 2015. This added information is alarming due to the nature of the timeline and publicized information that Vernon has publicly admitted to on his company blog, on Twitter and as well in several court documents which show Vernon’s admittance that Cryptsy was insolvent and likely to go out of business."

"Coin Fire is now able to report that multiple federal investigations are underway regarding Crypsty." "The online exchange is under several investigations with multiple agencies including the Securities and Exchange Commission, the Internal Revenue Service, and the Criminal Investigation Division of the Internal Revenue Service, among others."

"Documents from various investigations obtained by Coin Fire show a litany of purported wrongdoing by the company and several team members. The large number of allegations levied against the company varies from agency to agency in more than 300 pages of documents. In some instances, the investigation alleges that the company failed to obtain appropriate licenses. In one particular instance, a connection is made between a Cryptsy team member and GAW Miners’ fraudulent operations. Other government agencies report a failure to report gains appropriately, market manipulation, the sale of unlicensed securities, money laundering, and more."

"The document cache obtained by Coin Fire contains materials ranging from the Securities and Exchange Commission to the Department of Homeland Security. The earliest records in the cache against Crypsty contain minor investigations of wrong-doing and are dated prior to the larger investigation of Mr. Homero Joshua Garza and Mr. Carlos Garza; however, the information discovered during the GAW Miners investigation caused lead investigators from multiple organizations to begin scrutinizing Crypsty and its parent company, Project Investors, more closely. The investigation against Cryptsy intensified after a “PayCoin controller” was exchanged to the company and the two investigations began to run concurrently."

"In one document, FinCen began to examine allegedly illegal transactions where money was being moved to accounts connected to suspected terrorists, but the investigation had since stalled. This document was set aside and ignored for several months until recent information indicated potential transactions with suspected terrorists. Later documents referenced this earlier FinCen document, with the most recent alleging that both Project Investors and Cryptsy were aware of an account on their platform being used by an individual with ties to banking watch lists and restrictions."

"The documents also explore other allegations. In one report, an organization alleges that the company utilized automated trading software on a platform that directly benefitted Crypsty staff members. The report also alleges that a key Cryptsy staff member performed fraudulent transactions related to the movement of PayCoin by Mr. Garza."

"Another document shows one organization beginning a probe of PayCoin’s blockchain history. This document alleges that Cryptsy was being used by Mr. Garza to disguise money movement for both him and his associates. Furthermore, the report claims that the company was aware of this movement and not merely complicit; this allegation is echoed by material within the document indicating that (1) staff member engaged in these fraudulent transactions and transfers, and directly engaged in market manipulation."

"I feel I need to give a response to the recent Coinfire article.   Like their previous article, they’ve make a lot of claims without giving any kind of proof to their claims.   I know many people don’t take coinfire very seriously these days, which is good.   However there are some out there that may not really know that the kind of “News” these guys produce is not always reliable."

"We have never been investigated for anything, period.  We have never gotten any letters from any of the agencies that they have stated in their article, nor have we been contacted via phone or any other method.  It’s safe to say that this article and their reporting are completely false.   My guess is that whomever wrote this article has personal reasons for writing it and are attempting to hurt our business and reputation."

"I have talked with a guy from GAW a while ago, but I never had any business collaboration with him or any other from GAW Miners, The only thing I had to do with them is list Paycoin; it was a very natural thing as it was a very popular coin and it had a lot of users, so of course I was going to list it on Cryptsy, why wouldn’t I list it? Well, there was a problem with the model, but it is just a cryptocurrency, so why it shouldn’t be listed on Cryptsy? However, as far as laundering money, I have never helped anyone do such thing."

"First off, we’ve never made any claims about being fully licensed at the state level.  I’m unsure where they received their information from, but like every other Bitcoin company in the US, we do not have state level MSB licenses.  Are we working to acquire them?  Yes, but the process can take years." "Coinfire claims to have tried contacting us, but I’m unsure the method they were attempting.  I’ve not seen anything from them requesting information.   Had they asked, we would have told them that we do not have state level licenses - just like anybody else who asks that question.  They certainly would not have had to call state by state requesting information because we would have told them we do not carry state licenses."

"We do, however, fully comply with our Federal MSB requirements.  This includes filing SAR (Suspicous Activity Reports) and CTR (Currency Transaction Reports).  We also have one of the most extensive KYC programs in the industry, scrub accounts against the OFAC list, and perform Transaction Monitoring.   At a federal level, we are compliant."

"FinCen is not really a license, it is a registration, so as a Federal money transmitter, you require to register with FinCen and file them reports of currency transactions, suspicious activity reports and stuff like that. It is super-easy to register with FinCen, the hardest part is to keep up with the reporting which we do regularly and I will share with you a copy of our filing records. I registered with FinCen when I launched the website back in 2013 and we were continuously working to be compliant with FinCen and technically, we were always exceeding their requirements. We had calls from FinCen personnel telling us “This is not something you have to tell us about”, so we were always exceeding the reporting requirements for them just to make sure that we were compliant with their regulations, but we have no “state level” licenses and the reality is there are very few exchanges that have ones."

"[I]t is all user driven so if someone puts in an order, and there is a matching order on the order book, then the trade is executed, so it is all automatic on the backend of the system and there is no human interaction required for a trade to get executed." "Every now and then, I get various altcoins but I trade them just like everyone else. Actually, in my opinion, bots are never as clever as a human trader would be."

"Reddit user Otohs posted an in-depth description of his ordeal with Cryptsy and their apparent unwillingness to process a withdrawal request. Otohs claimed to have a “fully verified account which had no limits,” but still could not retreive the 76 BTC he requested from his exchange wallet on October 5. Otohs claims that since his initial message to Cryptsy support, he “had only excuses but mostly just been ignored. By November 7, Otohs had become fed up with the exchange."

"On the 5th of October I requested a 76 BTC withdrawal from my fully verified account which had no limits, since then I've had only excuses but mostly just been ignored." The transactions "are show[n] in the attached screenshot as confirmed, but still pending and with no trxID as they have not been sent, kindly let me know ASAP when they will be sent as they are now one week overdue with no explanation, no apology, nothing!" "I have the equivalent of over 200 BTC that I'm trying to withdrawal in BTC, LTC & DASH, but the withdrawal window is not working, I traded out of many USD to do this at a large loss, when can I expect my money to be able to be withdrew-able?"

"Vernon took to Twitter on November 22 to report a server failure that resulted in all exchange wallets being “paused.” Vern reassured his followers that the wallets would go back online soon." "Two days later, Vernon sent out another tweet informing Cryptsy customers of a website outage. Vern blamed the downtime on a DDoS attack, and told his followers that the team was working to solve the problem." "CCN reported on this DDoS attack on the 25th, encouraging readers to send any information they might have regarding Cryptsy’s downtime. NewsBTC also reported on the DDoS attack, mentioning that Kraken suffered an assault as well."

On "January 9, 2016", "Bitcoinist discovered through an anonymous source that the Cryptsy team vacated its headquarters without notice. Our source made this discovery upon arriving at the building with the intention to visit Paul Vernon. When he got to the headquarters, our source found the building empty. Our source contacted the building manager, who told him that the Cryptsy team moved out a couple weeks ago. The building manager had no further information regarding the company’s whereabouts."

"After seeing our report on Cryptsy’s disappearance, a reader posted to facebook stating that he was attempting to withdrawal some funds from the exchange. His withdrawal was confirmed, but could not transfer the bitcoin to an address, and he found that his Cryptsy balance was at zero."

On "January 12, 2016 Paul Vernon claim[ed] that there is a phishing scam targeting Cryptsy customers."

"There is a phishing attempt going around prompting users to go to a cryptsy-refund website. Do not go to this website or give your login details on any website other than the official Cryptsy website. There were two avenues of the Phishing attempt. One was via SMS, using our provider Twilio and gained entry into our logs and sending ability via a weak password on that account." "UNTIL WE ARE ABLE TO DETERMINE EXTENT OF THE PHISHING ATTEMPT, ALL WITHDRAWALS ARE PAUSED." "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."

"Cryptsy Announcement: http://blog.cryptsy.com/ ALL trading and deposits are OFF. More wallets opened for withdrawal 1/27/2016"

"In any case, it is our intent to get every user their funds.  Depending on what option or combination of options we end up doing, this may take some time."

"Trades and withdrawals will be suspended on the site indefinately until some sort of resolution can be made. Here are our options: (1) We shut down the website and file bankruptcy, letting users file claims via the bankruptcy process and letting the court make the disbursements. (2) Somebody else comes in to purchase and run Cryptsy while also making good on requested withdrawals. (3) If somehow we are able to re-aquire the stolen funds, then we allow all withdrawal requests to process. I’m obviously open to any other ideas people may have on this. If you have information, you can email."

"The acknowledgement of insolvency and the hack claims come after months of customer withdrawal delays, comparisons to the now-defunct Japanese bitcoin exchange Mt Gox, and the filing of a class action lawsuit against the exchange. Cryptsy said that it has outstanding liabilities of approximately 10,000 BTC, or roughly $4.15m at press time. The site, which previously said that it would suspend trading and withdrawals indefinitely, has been taken offline as of press time."

"Following an attack on the crypto exchange, Cryptsy filed for insolvency in January 2016. Per the exchange, it lost around 13,000  Bitcoin and 300,000 Litecoin to the hackers, out of which approximately 10,000 Bitcoins belonged to its clients."

"The Cryptsy operator has also managed to do some interviews with Florida’s regional publication the Miami New Times. Vernon has denied any wrong doings and told the reporter he just regretted not being able to handle the hack the right way. Customers were not notified about the loss that happened in 2014 until the exchange was under water in 2016. Vernon and company operated the trading platform like a fractional reserve and hoped to pay the funds back but said bitcoin’s low price deterred that outcome."

"However, after facing withdrawal issues, the clients of the collapsed exchange filed charges against Cryptsy Founder Paul Vernon over his alleged negligence, unjust enrichment, conversion, and violation of Florida’s Deceptive and Unfair Trade Practices Act."

"On August 25, 2016, the Honorable Kenneth A. Marra of the United States District Court for the Southern District of Florida entered an order certifying in a class action lawsuit a class of Cryptsy account holders who were unable to access their cryptocurrency. That lawsuit is styled Leidel, et al. v. Project Investors, Inc. d/b/a CRYPTSY, Paul Vernon, and Lorie Ann Nettles, Case No. 9:16-cv-80060- MARRA (the “Cryptsy Case”)."

"The Cryptsy class action lawsuit alleges defendants Project Investors Inc., doing business as Cryptsy and Paul Vernon, stole the cryptocurrencies of Cryptsy account holders and converted it for their own use; defendant Lori Ann Nettles, during her marriage to and divorce from Vernon, was unjustly enriched by assets purchased with the proceeds of the stolen cryptocurrency; and defendants Ridgewood Investments Inc. and Kaushal Majmudar (“KM”) were unjustly enriched by the consulting fees received from Cryptsy." "Nettles, Ridgewood, and KM deny they have engaged in any wrongdoing and maintain they have not violated any laws. However, they have agreed to settle the class action lawsuit to avoid the burden and expense of ongoing litigation."

"Terms of the arguably unfair settlement require Nettles to hand over/liquidate the following assets whose proceeds will go towards the Settlement Fund. The assets include [a] diamond ring, [t]he Palm Beach County property, [a]ll monies received from the sale of the cryptocurrency holdings, [a]ll monies received from the sale of personal property belonging to Nettles, [a]ll monies received from the sale of Infiniti QX60 automobile belonging to Nettles, [a]ny other asset and monies obtained by Plaintiff’s lead counsel. The settlement terms allow the attorneys to charge a maximum of 33.33% of the total value of the settlement fund. In the case of attorneys’ fees exceeding the above-mentioned percentage, they will be required to reduce it to meet the requirement. After handing over all the assets, Nettles will be left with just enough to provide basic living necessities for herself and her children."

"The litigation against Cryptsy and Vernon is ongoing. According to the class notice, these defendants have repeatedly refused to respond to the Cryptsy lawsuit. A judge has issued a default judgment against them, and Vernon has reportedly fled to China." "[T]he founder of the exchange Paul Vernon, otherwise known as ‘Big Vern’, left his residency in Florida and allegedly is hiding out somewhere around Liaoning, China."

"Vernon’s exact whereabouts are unknown, and if he is in China as is rumored, an extradition treaty will be difficult. Copies of the court order were sent to Vernon’s PO box in Delray Beach and his publicly known email."

"US-based Coinbase’s name was dragged into the lawsuit when the plaintiffs accused it of being involved in laundering the funds. In a followup complaint filed in December 2016, Coinbase was accused of abetting the theft and facilitating the laundering of around $8.2 million in digital currencies." "Coinbase was accused of aiding and abetting Vernon’s scheme by allowing them to have accounts on their platform. Through these accounts, Vernon was allegedly allowed to convert bitcoin to U.S. dollars."

"Despite Coinbase’s push for a dismissal of the suit and settlement through arbitration, the motion was denied by the court. The recent settlement ended a three-year-long lawsuit that was nearing to a jury trial."

"Reported by Coindesk, the settlement between the US-based crypto exchange and the Cryptsy victims reached late last month. Per two court documents dated November 27 and December 10, the funds will be transferred to an escrow account, and the agent will be responsible for its distribution to the victims."

"No Class Member has received an amount equal to 100% of their losses when accounting for their combined respective distributions from the Cryptsy and Coinbase Settlements. While Plaintiff and the Receiver are pleased to distribute additional funds to the Class, such distributions, whether standing alone (i.e., for Class Members who make a claim for the first time) or in conjunction with prior distributions, very likely will not make any class member whole."

"Roughly six years after the founder of the now-defunct Bitcoin exchange company Cryptsy denied accusations that he had stolen millions of dollars in cryptocurrency that suddenly vanished from users' wallets, an unsealed federal indictment has charged the former Delray Beach man with doing precisely that."

"Paul "Big Vern" Vernon, 48, is charged with a slew of crimes tied to the disappearance of more than $5 million in Bitcoin and Litecoin, according to the 17-page indictment that was filed in August 2019 and unsealed Wednesday. Federal authorities say Vernon orchestrated a "sophisticated theft scheme" between 2013 and 2015, in which he stole more than a million dollars worth of users’ 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."

This exchange or platform is based in United States, or the incident targeted people primarily in United States.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

* Known history of when and how the service was started.
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.

Don't Include:

* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:

* When the service was actually started (if different than the "official story").
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.

== What Happened ==
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
{| class="wikitable"
|+Key Event Timeline - Cryptsy Withdrawals Closed/Bankruptcy
!Date
!Event
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|January 15th, 2016 12:00:00 AM
|First Event
|This is an expanded description of what happened and the impact. If multiple lines are necessary, add them here.
|-
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== Total Amount Lost ==
The total amount lost is unknown.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

== Total Amount Recovered ==
It is unknown how much was recovered.

What funds were recovered? What funds were reimbursed for those affected users?

== Ongoing Developments ==
What parts of this case are still remaining to be concluded?

== Prevention Policies ==
The situation could have been prevented if Cryptsy stored funds online or used a multi-signature wallet. The issues could have been solved sooner if customers were provided with visibility into the backing of funds, or validation was done for any of the assets.

There was no place to report and get assistance in the event of the hack, no mechanism for dispute, and no assistance to fall back on to cover any portion of customer losses.

== References ==
[https://www.financemagnates.com/cryptocurrency/news/coinbase-settles-cryptsy-victims-lawsuit-with-1-million/ Coinbase Settles Cryptsy Victims' Lawsuit for $1 Million] (Jul 8)

[https://web.archive.org/web/20150604044323/https://www.cryptsy.com/ Cryptsy - Trade Home] (Jul 8)

[https://web.archive.org/web/20160117045002/https://bitcointalk.org/index.php?topic=295157.msg6861797#msg6861797 <nowiki>[ANN][LK7] Lucky7Coin - PoW/PoS, BonusBlock based on your lucky 7s! |No Premine</nowiki>] (Jul 8)

[https://bitcointalk.org/index.php?topic=295157.msg6861797#msg6861797 <nowiki>[ANN][LK7] Lucky7Coin - PoW/PoS, BonusBlock based on your lucky 7s! |No Premine</nowiki>] (Jul 8)

[https://github.com/alerj78/lucky7coin GitHub - alerj78/lucky7coin] (Jul 8)

[https://www.walletexplorer.com/wallet/0c07e0bec1002bd2 <nowiki>0c07e0bec1002bd2 [WalletExplorer.com]</nowiki>] (Jul 8)

[https://www.walletexplorer.com/wallet/b16b6dbcdba373b3 <nowiki>b16b6dbcdba373b3 [WalletExplorer.com]</nowiki>] (Jul 8)

[https://www.walletexplorer.com/txid/c7b46a79fd8887038bd3a8e884b04820038415a60e0b9d2c2f5bcff68a2687bf <nowiki>c7b46a79fd8887038bd3a8e884b04820038415a60e0b9d2c2f5bcff68a2687bf [WalletExplorer.com]</nowiki>] (Jul 8)

[https://web.archive.org/web/20160127151703/http://blog.cryptsy.com/ Cryptsy Blog] (Jul 8)

[https://web.archive.org/web/20151008061242/http://coinfire.io/2015/10/04/federal-investigations-of-cryptsy-underway/ Federal Investigations of Cryptsy Underway] (Jul 8)

[https://99bitcoins.com/federal-investigations-of-cryptsy-underway/ Federal Investigations of Cryptsy Underway] (Jul 8)

[https://www.newsbtc.com/news/bitcoin/cryptsys-ceo-a-hard-man-in-the-face-of-coinfires-aggro/ Cryptsy's CEO - A Hard Man In The Face of Coinfire's Aggro!!!] (Jul 8)

[https://web.archive.org/web/20160317160556/http://ltc.blockr.io/tx/info/61e61a63f35c951a16870df9e0a34df462ee473fde819d134da9485d2e7d8f44 https://web.archive.org/web/20160317160556/http://ltc.blockr.io/tx/info/61e61a63f35c951a16870df9e0a34df462ee473fde819d134da9485d2e7d8f44] (Jul 8)

[https://topclassactions.com/lawsuit-settlements/closed-settlements/cryptsy-cryptocurrency-class-action-settlement/ Cryptsy Cryptocurrency Class Action Settlement - Top Class Actions] (Jul 8)

[https://www.cryptsysettlement.com/ https://www.cryptsysettlement.com/] (Jul 8)

[https://www.ccn.com/class-action-lawsuit-cryptsy-update-ex-wife-potentially-involved-lost-funds/ https://www.ccn.com/class-action-lawsuit-cryptsy-update-ex-wife-potentially-involved-lost-funds/] (Jul 8)

[https://www.ccn.com/lawsuit-cryptsy-proceed-planned-despite-theft-claim/ https://www.ccn.com/lawsuit-cryptsy-proceed-planned-despite-theft-claim/] (Jul 8)

[https://www.cryptoglobe.com/latest/2020/01/coinbase-settles-cryptsy-class-action-lawsuit-for-1-million/ Coinbase Settles Cryptsy Class-Action Lawsuit For $1 Million | Cryptoglobe] (Jul 8)

[https://www.newsbtc.com/all/cryptsy-lawsuit-ann-nettles-enters-settlement/ Cryptsy Lawsuit: Ann Nettles Enters into a Settlement] (Jul 8)

[https://news.bitcoin.com/vanished-cryptsy-ceo-big-vern-ordered-to-pay-8m-in-class-action-lawsuit/ Vanished Cryptsy CEO 'Big Vern' Ordered to Pay $8M in Class Action Lawsuit – News Bitcoin News] (Jul 8)

[https://topclassactions.com/lawsuit-settlements/closed-settlements/cryptsy-coinbase-class-action-settlement/ Cryptsy Coinbase Class Action Settlement - Top Class Actions] (Jul 8)

[https://www.silvermillerlaw.com/uncategorized/2022/01/28/feds-cryptsy-founder-stole-more-than-a-million-dollars-in-users-cryptocurrency/ » Feds: Cryptsy Founder Stole More Than a Million Dollars in Users’ Cryptocurrency] (Jul 8)

[https://www.coindesk.com/markets/2016/01/15/cryptsy-threatens-bankruptcy-claims-millions-lost-in-bitcoin-heist/ Cryptsy Threatens Bankruptcy, Claims Millions Lost in Bitcoin Heist - CoinDesk] (Jul 8)

[https://coinmarketcap.com/currencies/bitcoin/historical-data/ Bitcoin price today, BTC live marketcap, chart, and info | CoinMarketCap] (May 15)