Cryptsy Collection Efforts Continue with Court Victories
Victims of the Cryptsy fraud received good news this week in rulings from the two federal court cases. First, District Court Judge Kenneth Marra of The United States District Court for the Southern District of Florida granted final approval to the class action settlement reached with Vernon’s ex-wife and a minority Cryptsy shareholder. The Court praised the settlement and the attorneys involved including Class Counsel, Marc A. Wites of Wites and Kapetan (www.wklawyers.com), and David C. Silver, of Silver Law Group (www.silverlaw.com), noting that Cryptsy’s founder and majority shareholder, Paul Vernon, shut down Cryptsy, fled the country for China, and has refused to respond to or otherwise participate in the lawsuit.
In connection with granting final approval to the settlement, Judge Marra also authorized the Court-Appointed Receiver, James D. Sallah, to proceed with the sale of real estate, the proceeds from which will be used to help fund the settlement .Plaintiffs in the Class Action, and the Receiver, contended that Vernon used monies obtained from cryptocurrency stolen from Cryptsy accounts, to purchase the home.
Co-Class Counsel, Marc Wites, explained that the Court’s approval of the settlement is a big step in the process of providing relief to the victims of Cryptsy’s fraud. “There is still a lot more work to do” said Wites, explaining that “we must now liquidate all of the assets that are part of the settlement fund, review all of the claims submitted by Cryptsy victims, and then make distributions.” Wites is hopeful that distributions to victims will begin later this summer.
On another front, Cryptsy victims scored another victory in a separate, but related, class action brought against Coinbase. On Thursday, Judge Marra – who also presides over the Coinbase case – ruled that Coinbase could not force the class action claims of the Cryptsy victims to arbitration. Co-Class Counsel David Silver, remarked that “the Court ruling means that a party that does not sign a contract with an arbitration agreement, and does not agree to arbitration, cannot be forced to arbitration. This victory means that this case will be tried in public and resolved by a trial before a jury of Cryptsy victims peers.”
In denying Coinbase’s efforts to force the case to arbitration, the Court also refused to stay the case (which in layperson terms means to put in on hold or pause) while the Court-Appointed Receiver, Mr. Sallah (www.sallahcox.com), pursues claims in arbitration against Cryptsy. When the Court appoints a Receiver, explained Attorney Silver, the Receiver steps into the shoes of the company it was appointed to take over, so in this case Mr. Sallah, on behalf of Cryptsy, is suing Coinbase. Since the Coinbase contract with Cryptsy has an arbitration provision, and Coinbase sought to enforce that provision, the Receiver’s claims will proceed in arbitration.
“Coinbase wanted to stop the claims of the Class in Court pending the outcome of the arbitration, and the Court said no”, explained Mr. Sallah, who also is an attorney who often serves in the role of receiver in these types of actions. Sallah remarked that the litigation of cryptocurrency disputes are cutting edge issues in the courts, and that he is committed to working to help recover money for the victims of the Cryptsy fraud.