Cryptsy CEO Stole Millions From Exchange, Court Receiver Alleges

Cryptsy CEO Paul Vernon may have stolen as much as $3.3m from the now-defunct digital currency exchange and destroyed evidence of his illicit actions.

A report from court-appointed receiver James Sallah, published on 2nd August, details efforts to take control of assets tied to Cryptsy, most notably the digital currency holdings sought by the exchange's former customers.

The updates are the latest to follow Cryptsy's collapse in January, when after months of growing issues, Vernon blamed the closure on a previously undisclosed hack.

At the time, Vernon claimed as much as $10m in customer liabilities.

Now, that receiver is alleging millions of dollars worth of digital currency was taken from the exchange by Vernon over the course of its operation.

"[It's] not available for me to properly repay the victims and determine the full extent of Vernon's misconduct," the document reads.

According to Sallah, he has been able to secure digital currency holdings previously controlled by Cryptsy, some of which were related to blockchain movements spotted by former customers.

In mid-April, funds previously held on Cryptsy were moved to Bittrex, and in the midst of these movements, Sallah was reportedly alerted to the situation.

"After several verbal and written discussions with Bittrex, including several comprehensive sets of tracing analyses regarding the coins that Bittrex had frozen, Bittrex agreed to transfer the frozen coins, which including Unobtainium, Archcoin, Digibyte, Netcoin, Positron, Startcoin and Uro, that were traceable back to Cryptsy to me."

All told, more than $700,000 denominated in 40 different digital currencies has been taken into possession, Sallah wrote.