CoinGeek: Judges Rejecting Claims Victims Have No Recourse From Crypto Criminals
Steven Stradbrooke of CoinGeek writes Monday that judges are increasingly pushing back on the idea that victims of ‘crypto’ criminality have no recourse against the perpetrators of said crimes.
Stadbrooke and CoinGeek were long at the forefront of warning the crypto community in regard to the failed FTX Exchange's questionable ties with an attorney involved in seemingly trying to cover up a well publicized online poker cheating scandal years earlier. Oh, did we mention they made this individual their Chief Compliance Officer?
In his latest report, Stadbrooke cites District Judge Kenneth Marra ruling that the ‘The Ren Project’ is in civil contempt after it failed to reply to a ‘show good cause’ court order in a class action suit brought by customers of the defunct Cryptsy digital asset exchange.
From Stadbrooke:
Cryptsy collapsed in early 2016, shortly after its customers realized that then-CEO Paul Vernon had stolen over 11,000 of their BTC tokens and relocated to China from Cryptsy’s Florida headquarters. After safely ensconcing himself abroad, Vernon destroyed Cryptsy’s customer database in a failed bid to hide evidence of his theft. Vernon was officially designated a fugitive in 2019, and federal criminal charges were filed against him in January 2022.
In January 2016, Cryptsy customers teamed up to file a class action against Vernon, seeking the return of their stolen assets. In July 2017, Judge Marra entered a default judgment against Vernon. In June 2021, Marra issued a permanent injunction barring Vernon from transferring the stolen BTC.
During the court process, Vernon transferred 685 of the stolen BTC—currently worth around $17 million—to Ren, a Singapore-based “open and community-driven protocol”.
Judge Marra found Ren in civil contempt and ordered it to immediately transfer the BTC in question to a North Field-controlled wallet or pay North Field the equivalent amount in USD.
Stadbrooke also points to two recent cases.
In 2021, a legal action was brought by Tulip Trading Limited (TTL) following the 2020 hack of private keys to wallet addresses containing over 111,000 unsplit Bitcoins belonging to Dr. Craig Wright. The gist of TTL’s suit is that software developers exert significant control over their respective blockchains, making them fiduciaries with legal obligations to blockchain users.
Earlier this month, the U.K. Court of Appeal agreed with TTL, unanimously overturning a High Court decision and paving the way for a full trial. The Court of Appeal believes the developers “realistically” have “a duty to act to introduce code so that an owner’s Bitcoin can be transferred to safety in the circumstances alleged by [TTL].”
- Aaron Goldstein, Gambling911.com
