Silver Law Group has filed two lawsuits: one against Paul Vernon, CEO of Cryptsy a cryptocoin to cryptocoin exchange, and Trendon Shavers, also known as "pirateat40", operator of a ponzi scheme, Bitcoin Savings and Trust. Many of Cryptsy's customers have been disappointed with the service, as complaints of users missing coins have surfaced. These complaints became so numerous, the company sent out a blanket email to their users addressing the issue:
Dear Crypsty user. This is a message in answer to many of the tickets we have been receiving over the past 48 hours regarding incorrect balances and disappearing coins.
First please let me assure you that your coins are not lost and are very safe.
For the past few days, due to an article in a few major media newspapers, we have been experiencing a major increase in new user signups, transactions and customer support issues. This influx put a tremendous amount of load on our servers slowing things down to a crawl.
To remedy this we added more servers, hired extra customer support agents, and moved the order cancellation routine out of the main trade engine so that trades will execute faster.
However the new routing was not cancelling the orders correctly since last night This morning there were a large number of unprocessed cancellations in the queue. That queue is now almost completed and 90% of cancellations have now processed your coins back to your balance.
There are still a few left to go, so if your balance is still not correct at the time of this message please give it a little more time to finish auditing.
We have corrected the issue that caused this and it should not happen again.
Please be patient as we go through our growing pains and continue to make Cryptsy the #1 coin exchange in the world.
If your balance is correct, there is no need to reply. If your balance is NOT correct, or if there is still an issue in your account.. please feel free to contact us.
Skye Bonow, the plaintiff in the lawsuit against Cryptsy claims the company defrauded him of at least 20 BTC in deposits. The filing on October 22nd outlines an unsettling story of Bonow's experience with the service:
- From May 2013 through July 2013 Plaintiff deposited approximately 20 BTC into what he believed was his unique, protected Cryptsy account.
- Through a series of position plays and successful speculation, Plaintiff successfully traded in virtual currencies through December 2013 when his Cryptsy account balance displayed a value of at least 170 BTC.
- In or before December 2013, defendants became aware of a breach in Cryptsy's security protocol which allowed user accounts to be pilfered.
- On or about January 26, 2014, Plaintiff's Cryptsy account displayed approximately one hundred forty (140) BTC in value.
- On January 27, 2014, Plaintiff's Cryptsy account displayed approximately zero (0) BTC in value.
- On or about January 26, 2014, between approximately 5:20 p.m. and 5:38 p.m., Plaintiff's Cryptsy account was drained through an internally transferred process by virtue of a series of trades within the Cryptsy platform. At all times relevant, Defendants maintained control of all transactions through Cryptsy's internal processes.
- On or about January 27, 2014, Plaintiff contacted Defendants to report the theft, but Defendants did nothing to make Plaintiff whole.
- In or about June 2014, Defendants upon information and belief, transferred Plaintiff's BTC out of Defendants' control to a third party with complete disregard for their knowledge that Plaintiff made a claim to those assets.
Silver Law Group is pursuing another lawsuit, this one being filed against Trendon Shavers, also known by his handle "pirateat40". The suit is a complaint for damages against Bitcoin Savings and Trust, run by Shavers, for using false and misleading claims of easy profits. Complaints in the lawsuit against Bitcoin Savings and Trust state:
Shavers falsely promised investors up to 7% interest weekly based on Bitcoin S&T's purported Bitcoin market arbitrage activity. In reality, the Bitcoin S&T offering was a sham and Ponzi scheme whereby Shavers used new Bitcoin S&T investors' Bitcoin to pay the promised returns on outstanding Bitcoin S&T investments and misappropriated Bitcoin S&T investors' Bitcoin for his personal use.
The lawsuit names the plaintiffs as Liquid Bits LLC, a corporation, and three individuals: Remy Jacobson, Jean-Marc Jacobson, and Greg Bachrach. Also listed is each of the plaintiffs' investment in Bitcoin Savings and Trust:
|Name||Number of Bitcoin|
|Liquid Bits, LLC||998 BTC|
|Remy Jacobson||1071.8114 BTC|
|Jean-Marc Jacobson||2143.6227 BTC|
|Greg Bachrach||1607.72 BTC|
Silver Law Group is pursuing up to $12 million in restitution from the defendants named in the two lawsuits on behalf of the plaintiffs.