U.S. cryptsy victims who lost money in 2016 may be eligible for further recoupment, according to the FBI.
Following the demise of cryptocurrency exchange Cryptsy, some former customers of the platform received a notice last week advising them of a new development in the continuing class-action lawsuit settlement process.
The document, which was authorized by the United States District Court for the Southern District of Florida, states that those who were defrauded during the 2016 collapse of the digital finance platform may be eligible to receive money from additional recovery.
Cryptsy was a cryptocurrency exchange that went out of business in January 2016 after months of user complaints about difficulties withdrawing funds from the platform.
The court later found that Cryptsy founder Paul Vernon had stolen millions of dollars’ worth of digital assets from customers before fleeing to China, and that he had committed fraud.
Later that year, a group of Cryptsy users filed a class action lawsuit against the company and its founder, and what was left of the exchange was placed into receivership.
The court-appointed receiver began liquidating various assets associated with the defunct company in January 2017, amassing approximately $1.5 million by June 2017, which was divided among the victims of the bankruptcy.
Later, the receiver and a representative for the class of victims filed a separate lawsuit against Coinbase, alleging that the company assisted and abetted Vernon’s conduct by allowing him to convert the stolen funds to dollars in the United States.
After nearly three years of litigation, a class action settlement was reached in January 2020, with Coinbase agreeing to pay out nearly $1 million to Cryptsy account holders who had been defrauded.
The most recent notice pertains to yet another round of restitution for the funds that were swindled. An extra $875,000 was obtained on behalf of the class by bringing a lawsuit against Xiuxia Liu, Paul Vernon’s girlfriend, according to the victims’ counsel.
A proportionate share of the funds will be distributed to those who had filed valid claims in the two previous settlements, or who had submitted a valid claim in the Liu settlement, by the deadline of December 12, 2022. Following the publication of the notice, it is anticipated that payments will begin to be made on or before February 20, 2022.