Part of the CustodyStress archive of observed Bitcoin custody incidents
CS-00389
Institutional lockout — Cryptsy (2016)
BlockedCase description
The Cryptsy receiver's investigation in early 2016 revealed that CEO Paul Vernon had allegedly moved approximately 11,000 BTC of customer funds to his personal accounts and that company records had been destroyed. The receiver filed claims against Vernon. Creditors had no access to their funds while the civil action proceeded, and the criminal investigation limited asset recovery options.
Custody context
| Stress condition | Vendor lockout |
| Custody system | Exchange custody |
| Outcome | Blocked |
| Documentation | Unknown |
| Year observed | 2016 |
| Country | United States |
Structural dependencies observed
What this illustrates
Before anyone could access the funds, a legal process had to be completed first. Access was not recoverable.
Outcome interpretation
Access was not possible under the reported conditions.
Source
Publicly Reported
Evidence type
News article
Related cases involving vendor lockout
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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