Cryptsy Withdrawals Closed/Bankruptcy - Revision history

Azoundria: Another 30 minutes complete. Prevention filling in. Prepared promotion for article.

2024-01-15T20:45:15Z

Another 30 minutes complete. Prevention filling in. Prepared promotion for article.

← Older revision		Revision as of 14:45, 15 January 2024
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	"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."		"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."</blockquote>However, Paul Vernon issued a rebuttal of the CoinFire article shortly thereafter.<blockquote>"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."		"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."</blockquote>However, Paul Vernon issued a rebuttal of the CoinFire article shortly thereafter.<blockquote>"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."		"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."		"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."
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	"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."		"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."
	\|-		\|-
	\|January ~~15th~~, 2016		\|January 14th, 2016 10:29:00 PM MST
	\|Platform Insolvency		\|Platform Insolvency
	\|"The ~~platform was insolvent by January~~ of ~~2016~~.~~" "Following~~ an ~~attack on~~ the ~~crypto exchange~~, ~~Cryptsy filed for insolvency in January 2016~~."		\|CoinDesk reports that Cryptsy has declared insolvency<ref name="coindesk-8430" />, claiming to be the victim of a hack in July 2014 that resulted in the loss of approximately 13,000 BTC and 300,000 LTC. The exchange alleges that unless the funds are recovered or a buyer covers the losses, it will be forced to shut down and declare bankruptcy. This announcement follows months of withdrawal delays, customer dissatisfaction, and a class-action lawsuit filed against the exchange. Cryptsy has also blamed an article published in October for causing a bank run and claimed that attempts to contact authorities, including the FBI, were initially unsuccessful.
	"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."		"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."
	\|-		\|-
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	The coins were split into separate wallets with a balance of 1,000 bitcoin each, and stayed idle all the way until 2022.		The coins were split into separate wallets with a balance of 1,000 bitcoin each, and stayed idle all the way until 2022.

			"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."
	"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."

	== Total Amount Lost ==		== Total Amount Lost ==
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	"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."		"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."

			On January 15th, 2016, "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."

	The total amount lost has been estimated at $4,291,000 USD.		The total amount lost has been estimated at $4,291,000 USD.
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	=== Not Reported To Authorities ===		=== Not Reported To Authorities ===
	"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."		"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."		"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."

	=== Interviews With Paul Vernon ===		=== Interviews With Paul Vernon ===
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	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.		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.
	== Individual Prevention Policies ==		== Individual Prevention Policies ==
	{{Prevention:Individuals:~~Placeholder~~}}		{{Prevention:Individuals:Avoid Third Party Custodians}}

			{{Prevention:Individuals:Store Funds Offline}}

	{{Prevention:Individuals:End}}		{{Prevention:Individuals:End}}

	== Platform Prevention Policies ==		== Platform Prevention Policies ==
	{{Prevention:Platforms:~~Placeholder~~}}		{{Prevention:Platforms:Implement Multi-Signature}}

			{{Prevention:Platforms:Regular Audit Procedures}}

			{{Prevention:Platforms:Establish Industry Insurance Fund}}

	{{Prevention:Platforms:End}}		{{Prevention:Platforms:End}}

	== Regulatory Prevention Policies ==		== Regulatory Prevention Policies ==
	{{Prevention:Regulators:~~Placeholder~~}}		{{Prevention:Regulators:Platform Security Assessments}}

			{{Prevention:Regulators:Establish Industry Insurance Fund}}

	{{Prevention:Regulators:End}}		{{Prevention:Regulators:End}}

Azoundria: Another 30 minutes complete. About section completely spread. Added YouTube interview with Paul Vernon. Started going through sources.

2023-12-14T19:37:58Z

Another 30 minutes complete. About section completely spread. Added YouTube interview with Paul Vernon. Started going through sources.

Show changes

Azoundria at 20:56, 12 December 2023

2023-12-12T20:56:30Z

← Older revision		Revision as of 14:56, 12 December 2023
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	<ref name="financemagnates-8405" /><ref name="cryptsyarchive-8407" /><ref name="bitcointalkarchive-8411" /><ref name="bitcointalk-8412" /><ref name="alerj78github-8413" /><ref name="walletexplorer-8414" /><ref name="walletexplorer-8415" /><ref name="walletexplorer-8416" /><ref name="cryptsyblogarchive-8410" /><ref name="coinfirearchive-8420" /><ref name="99bitcoins-8421" /><ref name="btcdotcom-8417" /><ref name="ltcarchive-8418" /><ref name="topclassactions-8422" /><ref name="cryptsysettlement-8406" /><ref name="ccn-8423" /><ref name="ccn-8424" /><ref name="cryptoglobe-8425" /><ref name="btcdotcom-8426" /><ref name="newsdotbitcoin-8427" /><ref name="topclassactions-8428" /><ref name="silvermillerlaw-8429" /><ref name="coindesk-8430" /><ref name="coinmarketcap-623" />		<ref name="financemagnates-8405" /><ref name="cryptsyarchive-8407" /><ref name="bitcointalkarchive-8411" /><ref name="bitcointalk-8412" /><ref name="alerj78github-8413" /><ref name="walletexplorer-8414" /><ref name="walletexplorer-8415" /><ref name="walletexplorer-8416" /><ref name="cryptsyblogarchive-8410" /><ref name="coinfirearchive-8420" /><ref name="99bitcoins-8421" /><ref name="btcdotcom-8417" /><ref name="ltcarchive-8418" /><ref name="topclassactions-8422" /><ref name="cryptsysettlement-8406" /><ref name="ccn-8423" /><ref name="ccn-8424" /><ref name="cryptoglobe-8425" /><ref name="btcdotcom-8426" /><ref name="newsdotbitcoin-8427" /><ref name="topclassactions-8428" /><ref name="silvermillerlaw-8429" /><ref name="coindesk-8430" /><ref name="coinmarketcap-623" />

	~~== About Paul Vernon ==~~

	== About Cryptsy ==		== About Cryptsy ==

Azoundria: Another 30 minutes complete. Just sorting the information from the about section into other sections.

2023-12-12T20:55:13Z

Another 30 minutes complete. Just sorting the information from the about section into other sections.

Show changes

Azoundria at 23:59, 12 April 2023

2023-04-12T23:59:21Z

← Older revision		Revision as of 17:59, 12 April 2023
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	{{Imported Case Study\|source=https://www.quadrigainitiative.com/casestudy/cryptsywithdrawalsclosedbankruptcy.php}}		{{Imported Case Study 2\|source=https://www.quadrigainitiative.com/casestudy/cryptsywithdrawalsclosedbankruptcy.php}}
	{{Unattributed ~~Citations~~}}		{{Unattributed Sources}}

	[[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.		[[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.
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	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.		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.		This exchange or platform is based in United States, or the incident targeted people primarily in United States.<ref name="financemagnates-8405" /><ref name="cryptsyarchive-8407" /><ref name="bitcointalkarchive-8411" /><ref name="bitcointalk-8412" /><ref name="alerj78github-8413" /><ref name="walletexplorer-8414" /><ref name="walletexplorer-8415" /><ref name="walletexplorer-8416" /><ref name="cryptsyblogarchive-8410" /><ref name="coinfirearchive-8420" /><ref name="99bitcoins-8421" /><ref name="btcdotcom-8417" /><ref name="ltcarchive-8418" /><ref name="topclassactions-8422" /><ref name="cryptsysettlement-8406" /><ref name="ccn-8423" /><ref name="ccn-8424" /><ref name="cryptoglobe-8425" /><ref name="btcdotcom-8426" /><ref name="newsdotbitcoin-8427" /><ref name="topclassactions-8428" /><ref name="silvermillerlaw-8429" /><ref name="coindesk-8430" /><ref name="coinmarketcap-623" />
	<ref name="financemagnates-8405" /><ref name="cryptsyarchive-8407" /><ref name="bitcointalkarchive-8411" /><ref name="bitcointalk-8412" /><ref name="alerj78github-8413" /><ref name="walletexplorer-8414" /><ref name="walletexplorer-8415" /><ref name="walletexplorer-8416" /><ref name="cryptsyblogarchive-8410" /><ref name="coinfirearchive-8420" /><ref name="99bitcoins-8421" /><ref name="btcdotcom-8417" /><ref name="ltcarchive-8418" /><ref name="topclassactions-8422" /><ref name="cryptsysettlement-8406" /><ref name="ccn-8423" /><ref name="ccn-8424" /><ref name="cryptoglobe-8425" /><ref name="btcdotcom-8426" /><ref name="newsdotbitcoin-8427" /><ref name="topclassactions-8428" /><ref name="silvermillerlaw-8429" /><ref name="coindesk-8430" /><ref name="coinmarketcap-623" />

	== About Cryptsy ==		== About Cryptsy ==
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	!Description		!Description
	\|-		\|-
	\|January 15th, 2016 ~~12:00:00 AM~~		\|January 15th, 2016
	\|Main Event		\|Main Event
	\|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.		\|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
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	== Ongoing Developments ==		== Ongoing Developments ==
	What parts of this case are still remaining to be concluded?		What parts of this case are still remaining to be concluded?
			== General Prevention Policies ==
	== 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.		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.		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.
			== Individual Prevention Policies ==
			{{Prevention:Individuals:Placeholder}}

			{{Prevention:Individuals:End}}

			== Platform Prevention Policies ==
			{{Prevention:Platforms:Placeholder}}

			{{Prevention:Platforms:End}}

			== Regulatory Prevention Policies ==
			{{Prevention:Regulators:Placeholder}}

			{{Prevention:Regulators:End}}

	== References ==		== References ==
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	<ref name="coindesk-8430">[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, 2022)</ref>		<ref name="coindesk-8430">[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, 2022)</ref>

	<ref name="coinmarketcap-623">[https://coinmarketcap.com/currencies/bitcoin/historical-data/ Bitcoin price today, BTC live marketcap, chart, and info \| CoinMarketCap] (May 15, 2021)</ref></references>		<ref name="coinmarketcap-623">[https://coinmarketcap.com/currencies/bitcoin/historical-data/ Bitcoin price today, BTC live marketcap, chart, and info \| CoinMarketCap] (May 16, 2021)</ref></references>

Azoundria at 00:52, 16 February 2023

2023-02-16T00:52:59Z

Show changes

Azoundria: Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/cryptsywithdrawalsclosedbankruptcy.php}} CryptsyCryptsy 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 "Lucky7Coi..."

2023-01-24T20:47:10Z

Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/cryptsywithdrawalsclosedbankruptcy.php}} thumb|CryptsyCryptsy 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 "Lucky7Coi..."

Show changes