Coinbase Settles Cryptsy Victims’ Lawsuit for $1 Million

Coinbase settled a class action lawsuit

Coinbase settled a class action lawsuit brought against them by victims of the now-defunct cryptocurrency exchange Cryptsy, for $962,500

Coindesk reported that the settlement reached between the US-based cryptocurrency exchange and the Cryptsy victims late last month. According to two court documents, dated November 27, and December 10, the funds were transferred to an escrow account and the agent will distribute them to the victims.

Cryptsy filed an insolvency petition in January 2016 after a cyberattack on its crypto exchange. According to Cryptsy, the exchange lost approximately 13,000 Bitcoin and 300,000. Litecoin to hackers. Of these, around 10,000 Bitcoins belonged its clients.

After facing withdrawal problems, Cryptsy clients filed charges against Paul Vernon, Cryptsy founder, for alleged negligence, conversion and violation of Florida’s Deceptive and Unfair Trade Practices Act.

The plaintiffs also created an online page to welcome victims who lost their funds or joined the exchange prior to 2015.

Negligence on behalf of the exchange

The lawsuit brought the name of US-based Coinbase into question. It was accused by the plaintiffs of involvement in laundering funds. A follow-up complaint was filed in December 2016 and Coinbase was accused in abetting theft and facilitating the laundering of approximately $8.2million in digital currencies.

The court denied Coinbase’s motion to dismiss the suit and settle through arbitration. A three-year-old lawsuit was about to be tried by a jury.

Multiple cryptocurrency platforms are in court. Some from users, others from the Securities and Exchange Commission. California-headquartered Ripple is also facing a class-action lawsuit that alleged that the company-issued XRP token falls under the category of securities. Tomorrow is the hearing.