The US Department of Justice charged Project Investors Inc. CEO and founder Paul Vernon with stealing $1 million from wallets held by the now-defunct crypto exchange Cryptsy.
The Department of Justice charged Vernon, 48, with tax evasion, wire fraud, money laundering, computer fraud, and destruction of data in a federal investigation, among other things, in a 17-count indictment released in Miami Federal court.
Vernon stole over $1 million from exchange-controlled wallets between May 2013 and May 2015, according to the DOJ, then transferred the monies into his personal bank account using his own crypto wallet. Vernon, on the other hand, “at no time during this time period” informed his customers about the theft.
According to the Department of Justice, Vernon told Cryptsy staff in July 2014 that a hacker had stolen $5 million in bitcoins and other cryptocurrencies from the exchange, but he didn’t tell his clients until November 2015.
Vernon hacked into Cryptsy servers from a remote location in 2016, after traveling to China and stating that Cryptsy was in receivership, the agency claims, took Cryptsy’s database containing clients’ cash, and destroyed the database to conceal his illicit behavior. Vernon has remained hidden. Cryptsy was shut down in 2016.
Vernon allegedly filed “false and fraudulent” federal income tax returns, severely underreporting and underpaying what he owed, according to the DOJ.
Vernon is believed to be still in China, according to David Silver, a securities fraud and investment loss attorney who filed a civil complaint against Vernon and the exchange. Silver told CoinDesk that he’ll keep an eye on the 11,325 bitcoin that “went missing and is still sitting in private wallets.”
“We continue to track those coins in real time,” Silver said. “If Vernon ever tries to liquidate the stolen money, we will work within the boundaries of the law to freeze and recover that stolen bitcoin.”