"The plan was to use a portion of revenue to replenish the wallets. At the time, he declined to say whether he had ever used or diverted his users' funds for personal use. In a 2016 email interview with New Times, Vernon said he regretted not sounding the alarm earlier about the hack.
A customer who had lost 140 Bitcoins in a security breach sued Vernon for fraudulent business practices. On July 29, 2014, Vernon told employees that the company had been hacked and millions in cryptocurrency had been stolen. When Vernon informed Cryptsy's users about the hack more than a year later, many were left feeling bamboozled since it was around this time that Vernon had fled to China. According to his ex-wife, he went there with a girlfriend he had been hiding for nearly a year.
By November 2013, Vernon told the Wall Street Journalhis exchange was handling 33,000 trades per day.īut the following year, dozens of Cryptsy users began complaining about having trouble accessing their funds. He had started a few companies - including a website-hosting company specializing in high-bandwidth pornography sites, and an early Netflix competitor that packaged and mailed DVDs - before launching Cryptsy, an exchange that allowed users to trade Bitcoin with a number of other altcoins, in May of 2013. Vernon was tech-savvy, ambitious, and an early Bitcoin adopter. New Times previously chronicled Crypsty's downfall in "Cryptsy Founder Paul Vernon Disappeared, Along With Millions of His Customers' Cash" published in June 2016, six months after the company abruptly shut down and left users without a way to withdraw their digital currencies. Vernon, who was deemed a fugitive in 2019, did not respond to New Times' emailed request for comment. He is also accused of evading federal income tax in 20.Īll but one of the 17 charges against Vernon carry maximum prison sentences of 20 years, according to the indictment, which has been embedded at the end of this article. Federal authorities say Vernon orchestrated a "sophisticated theft scheme" between 20, in which he stole more than a million dollars worth of users’ digital funds on the exchange, deposited them to his personal wallet, and then transferred the funds to his personal bank account, and later destroyed the evidence. Paul "Big Vern" Vernon, 48, is charged with a slew of crimes tied to the disappearance of more than $5 million in Bitcoin and Litecoin, according to the 17-page indictment that was filed in August 2019 and unsealed Wednesday.
Roughly six years after the founder of the now-defunct Bitcoin exchange company Cryptsy denied accusations that he had stolen millions of dollars in cryptocurrency that suddenly vanished from users' wallets, an unsealed federal indictment has charged the former Delray Beach man with doing precisely that.
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