CEO of major online cryptocurrency exchange company charged with defrauding company customers, destroying evidence and tax evasion | USAO-SDFL

0

Miami, Florida – A 17-count indictment has been unsealed in federal court in Miami, Florida, charging Paul E. Vernon, 48, founder, operator and CEO of Project Investors Inc., doing business under the name Cryptsy, with criminal charges for his involvement in a sophisticated theft scheme involving his cryptocurrency exchange. The charges include tax evasion, wire fraud, money laundering, computer fraud, tampering with records, documents and other items, and destroying records in connection with a federal investigation.

According to the indictment, Paul E. Vernon solicited and caused cryptocurrency investors to trust the security of Cryptsy, an online cryptocurrency exchange company, to store and trade their virtual currency. . Vernon exercised control over the cryptocurrencies deposited on the Cryptsy site. Between May 2013 and May 2015, Vernon used his control over Cryptsy’s accounts, known as wallets, to steal over $1 million from Cryptsy’s cryptocurrency wallets. Once Vernon stole his clients’ funds from Cryptsy’s wallets, he deposited the funds into a personal cryptocurrency wallet and then transferred the same funds to his personal bank account. At no time during this period did Vernon disclose this theft of its clients’ funds from its clients’ Cryptsy wallets.

Around July 29, 2014, Vernon informed Cryptsy employees that Cryptsy had been hacked by an unidentified party and that the hacker had stolen over five million dollars worth of bitcoins and other cryptocurrencies from Cryptsy. For six months after this disclosure to its employees, Vernon continued to operate Cryptsy, including soliciting new customers, without disclosing to its customers that the security of the website had been compromised. In or around November 2015, Vernon abruptly moved to China and shortly thereafter publicly reported to Cryptsy customers about the 2014 hack of Cryptsy wallets and the loss of bitcoins and other cryptocurrencies. In April 2016, after being informed that Cryptsy was in receivership, Vernon hacked into Cryptsy’s servers remotely, stole Cryptsy’s database containing customer funds, and destroyed the customer database to conceal his illicit activity.

The indictment further alleges that Vernon attempted to evade his federal tax obligations for 2014 and 2015. In each of 2014 and 2015, Vernon caused false and fraudulent U.S. personal income tax returns to be filed. in which he had under-reported taxes due and owing in the United States. Based on his actual taxable income in 2014 and 2015, Vernon’s tax due and payable in the United States was significantly higher for each of those years than the amounts reported in the United States.

Juan Antonio Gonzalez, U.S. Attorney for the Southern District of Florida, Matthew D. Line, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office, and George L. Piro, Special Agent in Charge, The Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

This matter was investigated by the IRS-CI and the FBI’s Miami Field Office, with assistance from the United States Secret Service’s Miami Field Office. Assistant US Attorney Brooke Watson is pursuing the case. Assistant U.S. Attorney Daren Grove is handling the asset forfeiture.

The charges in an indictment are only allegations and the defendant is presumed innocent until proven guilty beyond a reasonable doubt by a court.

If you were a customer of Cryptsy.com and would like to file a complaint, please visit www.IC3.gov. Please refer to “Cryptsy” in your complaint.

Court documents and related information can be found on the District Court for the Southern District of Florida website at www.flsd.uscourts.gov or http://pacer.flsd.uscourts. gov, under file number 19-cr-20509.

###

Share.

Comments are closed.