Part of the CustodyStress archive of observed Bitcoin custody incidents
CS-00215
A later court-appointed receiver found that CEO Paul Vernon had also stolen
BlockedCase description
The Cryptsy collapse in December 2015 revealed that the exchange had been operating for over a year without disclosing the July 2014 hack to its users. During this entire period customers had continued to deposit, unaware that the exchange was insolvent. A later court-appointed receiver found that CEO Paul Vernon had also stolen approximately $3.3 million of customer BTC for personal use.
Custody context
| Stress condition | Documentation absent |
| Custody system | Exchange custody |
| Outcome | Blocked |
| Documentation | Unknown |
| Year observed | 2015 |
| Country | United States |
Structural dependencies observed
What this illustrates
Nobody had written down how to get back in. That knowledge existed only in the owner's head. Access was not recoverable.
Outcome interpretation
Access was not possible under the reported conditions.
Source
Publicly Reported
Evidence type
News article
Related cases involving documentation absent
This archive documents observed custody survivability failures. It does not attempt to document all Bitcoin losses or security incidents.
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Framework references
Where Bitcoin Custody Intersects Legal and Fiduciary Authority
Where custody creates gaps in estate planning, fiduciary duty, and professional responsibility.
Professional Scope Boundary Matrix
What each professional or product covers, what they do not, and where gaps form between them.
The Independent Assessment Layer in Bitcoin Custody
How independent diagnostic layers emerge when multiple parties depend on shared infrastructure.
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