The U.S. Department of Justice (DoJ) has indicted Project Investors Inc. (also known as Cryptsy) CEO and founder Paul Vernon for stealing $1 million from wallets that the now-defunct crypto exchange controlled, the agency announced Wednesday.
In a 17-count indictment that was unsealed in federal court in Miami, the DOJ charged Vernon, 48, with tax evasion, wire fraud, money laundering, computer fraud and destruction of records in a federal investigation, among other charges.
The DOJ is alleging that between May 2013 and May 2015 Vernon stole over $1 million from wallets that the exchange controlled and used his own crypto wallet to transfer the funds into his personal bank account. But “at no time during this time period” did Vernon disclose the theft to his customers.
According to the DoJ, in July 2014, Vernon informed Cryptsy employees that a hacker had stolen $5 million in bitcoin and other cryptocurrencies from the exchange, but he didn’t report the hack to his customers until November 2015.
The agency says that in 2016, after moving to China and announcing that Cryptsy was in receivership, Vernon hacked into Cryptsy servers from a remote location, stole Cryptsy’s database containing customers’ funds and destroyed the database to conceal his illegal activity. Vernon remains in hiding. Cryptsy closed in 2016.
The DOJ is also alleging that Vernon filed “false and fraudulent” federal income tax reports, substantially underreporting and underpaying what he owed.
David Silver, a securities fraud and investment loss attorney who filed a civil lawsuit against Vernon and the exchange, believes that Vernon remains in China. Silver told CoinDesk that he will continue to track the 11,325 bitcoins that “went missing and which remains untouched in private wallets.”
“We continue to track those coins in real time,” Silver said. “If Vernon ever tries to liquidate the stolen money, we will work within the boundaries of the law to freeze and recover that stolen bitcoin.”
Read more: Cryptsy CEO Stole Millions From Exchange, Court Receiver Alleges
Source: https://www.coindesk.com/policy/2022/01/27/doj-indicts-cryptsy-exchange-founder-for-stealing-1m-in-crypto/