The cryptocurrency platform Coinbase has settled a class-action lawsuit by hundreds of former users of another cryptocurrency exchange, Cryptsy.
The settlement amounts to $962,500, which will be handed over to an escrow agent that is handling the class-action claims in relation to a previous lawsuit filed against Cryptsy. The lawsuit took almost three years to settle. The preliminary settlement filing states that Coinbase “unlawfully aided and abetted that conversion by allowing Cryptsy and Vernon to have accounts on the Coinbase platform.”
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The preliminary settlement was filed on November 27 of last year by Brandon Leidel on behalf of the plaintiffs at the Southern District of Florida, U.S. District Court. A total of 681 people joined the suit.
Per the filing, there will be a hearing on April 17, 2020 to where the settlement will be approved or amended. Leidel initially filed the lawsuit in 2016, alleging that Cryptsy CEO Paul Vernon had laundered millions of dollars away from the now-defunct exchange.
When it comes to Vernon, the collection of awarded Bitcoin has been difficult to attain. The filing says that the “plaintiff and the Class also obtained a judgment against VERNON awarding the Class at least some of the very bitcoin that VERNON stole from them. However, the judgment is presently uncollectible, because VERNON fled to China and refuses to provide the ‘keys’ necessary to access the bitcoin. Bitcoin by its very nature cannot be accessed or otherwise used, transferred or converted to fiat currency without such keys.”
Furthermore, the settlement filing says that the proposed settlement is an “excellent result that is in the best interests of the Class, providing an immediate benefit to the Class. Here, the principal wrongdoer, Vernon, has fled the country, is presently believed to be residing in the People’s Republic of China, and is believed to have hidden additional assets outside the United States. Accordingly, the Settlement must be considered in the context of the risk that protracted and costly litigation may be required that may result in a lesser recovery or no recovery at all.”
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