Coinbase recently agreed to settle a class-action lawsuit that it has been fighting in the courts for nearly three years. According to court documents, Coinbase has settled the case for $962,500. The settlement was arrived at towards the end of 2019. The exchange had earlier turned over 11,325 BTC to users of the defunct Cryptsy exchange.
The settlement was arrived at just before the case went to trial. A hearing is going to be held on April 17 this year for the settlement agreement to be approved. Besides that, it could be modified if there is a need for that. This lawsuit was brought against the exchange in 2016. It was claimed that Coinbase had a role to play in the collapse of the Cryptsy exchange.
The lawsuit alleges that Coinbase, being a regulated entity money services business in the US, should have conducted thorough AML and KYC checks on its users. As a result, it should have been able to find that the millions worth of crypto the Cryptsy CEO was funneling through the exchange were stolen. As such, they should have stopped him from using the exchange to launder their stolen money.
Lack of Regulation in the Crypto Sector
Lawyers representing victims of the Crytptsy scam said they appreciated the decision by Coinbase to settle. The lawyer pointed out that the case showed the importance of regulation. He noted that early on in the crypto sector, many exchanges shunned regulation and as a result, they stole from their clients at will.
It is also worth noting that regulators have not been willing to step up to create laws to protect investors in the crypto sector. To date, most of the largest economies in the world do not have specific laws protecting crypto assets and those investing in the crypto sector. Most of them only tax the industry but do little in creating supportive legislation.
Where is the Cryptsy CEO?
To date, nobody knows where he is. There have been rumors that he is hiding in China. However, if that were the case, getting him back in the USA would almost be impossible. This is because China and the US do not have an extradition agreement. Paul Vernon’s story was well-documented in an exhaustive report by the Miami New Times.
While he may have physically escaped, the law is still after him. In July 2017, a judge ordered that he pay $8 million to former users of Cryptsy. If he is ever found, not only will he have to pay back millions of dollars, he will most likely spend a long time in jail for his crimes.
This is not the first time that a crypto exchange CEO has run away with investor funds. A few weeks ago, we reported about the suspicious death of the QuadrigaCX CEO. Some of the former users of the exchange have even called for his body to be exhumed.
Image Source: Flickr