Bittrex has frozen over $100,000 worth of cryptocurrencies suspected to be linked to Cryptsy, according to documents filed by the court-appointed Receiver of Cryptsy’s assets, James D. Sallah Esq.
According to the documents, Sallah was contacted by “[k]nowledgeable experts in the industry” who warned him that the exchange’s funds were being moved to Bittrex, presumably with the intention to liquidate them.
At that time, Sallah served Bittrex with a subpoena and demand letter, ordering Bittrex to freeze all “accounts and wallets in Cryptsy’s name.” Two days later, Bittrex confirmed that it had frozen at least $100,000 worth of cryptocurrencies associated with Cryptsy.
Bittrex has promised to provide Sallah with the documentation about what exactly has been frozen, but had not done so at the time of the filing. Likewise, Sallah has indicated that he will be providing Bittrex with blockchain analysis to prove Cryptsy’s connection to the funds.
On April 10th, Bitcointalk forum members noticed that coins linked to Cryptsy were moving to coin mixers and exchanges. Those coins had not moved since owner Paul Vernon claimed the site was hacked. Those same forum users indicated that they would be contacting the Silver Law group, whom Sallah practices for.
Sallah took quick action, and the funds were locked by April 13th.
We have reached out to Bittrex for comment but they had no comment other than to state that they are cooperating with the Silver Law firm and asked that we direct all questions to them.
Other Cryptsy News From The Report
There are other significant bits of information available in the report. Some other highlights include:
Digital Ocean, Cryptsy’s ISP and Vault Networks Inc, Cryptsy’s server host, have both provided requested information to Sallah.
Coinbase was subpoenaed for the remains of Vernon’s account. They sent Sallah a check worth approximately $24.66.
Sallah also filed a lis pendem against Lori Ann Nettles, Paul Vernon’s now ex-wife, to prevent the sale of her house. The home, described as “luxurious” was allegedly purchased with Cryptsy funds. The house was on the market for $1,500,000, according to the report. Nettles’ car, an Infiniti QX80 was also allegedly purchased with Cryptsy funds to the tune of $80,000. Sallah has asked the court to include the car as part of the exchange’s assets. Both were allegedly purchased with cash.
The hearing that will determine the fate of both the car and the house is scheduled for June 6th,
The report also notes that Vernon has been completely inaccessible, seeming to ignore the case entirely.
“As of this First Report, Mr. Vernon has not responded to my letters/requests, has not provided any documents or information to me and therefore is not cooperating in any way, shape or form.”
Vernon previously claimed that Cryptsy was hacked and indicated that they were working with the authorities.
His ex-wife, by comparison, has been cooperating, not that she has any other choice.
“Ms. Nettles produced over 1,800 documents, which my counsel is currently reviewing. Some documents, such as monthly personal account statements, are incomplete, so I will be subpoenaing the relevant bank, TD Bank, for the missing records: Ms. Nettles, through counsel, has represented that she will cooperate with such a follow-up[.]”
We will have more on the Cryptsy case as it becomes available. While we received this information independently, CoinDesk has made the relevant documents available online. You can find them here.