According to legal documents filed this week, Coinbase has chosen to settle a lawsuit brought against it by users of the Cryptsy exchange.
Cryptsy
Cryptsy was once a widely popular crypto exchange which supported a number of altcoins. Cryptsy played an important role in the first altcoin boom, which really ended in 2014.
It came to infamy when it was all in support of the Paycoin launch.
Paycoin, as readers may remember, was a scam orchestrated by convicted scammer Josh Garza, who is currently in federal prison.
Paul Vernon, who ran Cryptsy, remains at large. Authorities would likely like to speak to him. In lieu of suing Cryptsy, whose assets were liquidated some time ago, with the help of the SIlver Miller law firm, a man sued Coinbase in 2016, alleging that they had helped Vernon liquidate his take from the Cryptsy scam.
That man’s name is Brandon Leidel. He was named the class representative. For all his efforts, he was awarded $2,500 total.
Without him, no case would have been born in the first place.
Coinbase
Eventually, a class formed around the notion that Coinbase had done wrong by supporting Vernon’s account.
Instead of carry the case to jury, Coinbase has chosen for just under $1 million, at $962,500.
The legal document reads, in part:
On December 13, 2016, Plaintiff filed the instant class action lawsuit against COINBASE, alleging that COINBASE aided and abetted the CRYPTSY Defendants in their breach of fiduciary duty and conversion of the Class’ cryptocurrencies and were otherwise negligent and unjustly enriched by their conduct.
The court found in favor of the plaintiff, and as a result Coinbase had to pay out. That’s the long and short of it. But the interesting point is that Coinbase didn’t even have to have the people as clients. Rather, Coinbase was found to have acted wrong when it assisted someone else who was doing wrong.
For all its know-your-customer provisions and protections, Coinbase still let Paul Vernon through, who was actively bilking customers out of millions and apparently later fled to China.
