Coinbase will be dragged to court by a former customer of the defunct cryptocurrency exchange Cryptsy, where it will have to face a jury trial of allegations of negligence. 

Coinbase’s appeal against the charges have been dismissed by an appeals court in Georgia, U.S and will have to face a full-blown jury to prove that the company did not help Cryptsy run away. Coinbase has been accused by former customers of Cryptsy of not doing anything to stop its chief executive from absconding with the customers’ money. Cryptsy CEO Paul Vernon had been laundering funds through a Coinbase Wallet and has been successful in doing millions of dollars before Cryptsy collapsed. The charges have been filed by plaintiff Brandon Leidel who is a former customer of Cryptsy.

Coinbase argued the case by showing the user agreements signed by Vernon as an account holder but the judge ruled that Cryptsy’s customers were not bound by those user agreements and did not need arbitration. The Eleventh court of appeals reiterated the decision on the plaintiff’s behalf that -

"Leidel does not seek to enforce the terms of the User Agreements, nor does he allege any tort rooted in an allegation that Defendant breached or facilitated a breach of any obligation uniquely imposed by those agreements. In other words, Leidel's claims are viable, if at all, without reference to the User Agreements, as the duties Defendant allegedly breached were not imposed by those agreements."

This is a class action lawsuit where a number of affected people come together to receive speedy justice. Coinbase which runs a wallet as well as an exchange had been used by Paul Vernon to launder and steal millions of dollars worth of user funds over past few years.

Cryptsy collapsed in 2015 with fund withdrawal issues and eventual closing down of the business. The money in question amounts to $8.2 million worth of bitcoins in 2015 which would be well above $100 million today.

The plaintiff’s law firm, Silver Miller is running this class action lawsuit and the co-founder, David Silver is part of the original lawsuit.

Cryptocurrency exchanges across the world are facing issues of fraud or regulatory inquiries which have mellowed the business profitability and increased the vulnerability of the customers. Coinbase, one of the largest exchanges and wallets in the U.S is facing a backlash from various fronts – insider trading allegations to merchant backlash.