Coinbase settles lawsuit with crypto exchange Cryptsy users

In 2014, the Cryptsy cryptocurrency exchange suddenly went bust, with its CEO, Paul Vernon, charged with having stolen more than 11,000 BTC. Three years later, Vernon would stand trial for his crimes, and was ultimately charged in the theft, despite his assertions that the exchange had been hacked. It was determined that part of the funds may have been laundered through the Coinbase exchange, and the latter was targeted for a possible role in the scandal. It would seem that Coinbase (NASDAQ: COIN) has decided to make things a little easier on Cryptsy’s victims, and will set aside almost $1 million for claims against the exchange.

Coindesk points out that Coinbase will be putting $962,500 into an escrow account, handled by an independent agent, to cover class-action claims tied to the lawsuit against Cryptsy. This amount follows a previous settlement against Cryptsy worth a total of 11,325 BTC. According to today’s figures, that amount would be worth around $96.1 million.

Coinbase was going to have to face a jury trial as a result of its indirect involvement with Vernon’s actions. The payment is a means to avoid the trial, but it still has to be approved by the courts. A hearing is scheduled for this April that will determine whether or not the settlement is adequate, or if additional changes are required.

The Silver Miller law firm, which has handled a number of high-profile crypto cases, worked with the Wites Law Firm on the lawsuits against Cryptsy and Coinbase. Marc Wites explained of the ordeal, “When companies go out of business, founders flee the country and the amount at issue is relatively small, most plaintiff law firms would decline to pursue the case. We were the only lawyers in the country to pursue a case against Cryptsy or Coinbase, individually or as a class action, and we were able to obtain multiple meaningful recoveries for victims who would have otherwise been left without any recourse.”

David Silver of Silver Miller was appreciative of Coinbase’s willingness to be proactive in trying to put the lawsuit to rest. He explains that the Cryptsy case showed how unregulated exchanges disregarded regulators and laws and added, “This case shows that businesses in the cryptosphere bear a large measure of responsibility, from with whom they decide to do business and with whom they choose to associate.”