A number of reports have surfaced on the internet about Cryptsy lately. There have been rumors about the Cryptsy trading platform and wallet, ever since cryptocurrency trading on its platform was suddenly halted a few days ago. Although trading resumed a day after, suspicions remained. Bitcoinist has reported on the anomalies, citing an anonymous source. This source claims that Cryptsy suddenly moved its headquarters without giving anyone fair warning. For a weary public, the strange move and the one day trading halt, certainly evoke the ghosts of Mt Gox.
Comparisons to Mt Gox could be based on reports from users about difficulties withdrawing funds from Cryptsy. Users have leveled accusations at Cryptsy for a few months already, highlighting the suspiciousness of their sudden zip code change. At least one user has taken to Reddit complaining about Cryptsy’s refusal to release close to $20,000 worth of cryptocurrency, in October 2015. On the same Reddit feed, other users complained about Cryptsy’s insolvency and even compared it to Mt Gox themselves.
Many users have claimed that Cryptsy has been censoring them on its chat, calling them liars. These are serious allegations against the company, which has a policy of limiting withdrawals to unverified accounts. Nevertheless, many of the users complaining claim to have verified accounts, which should allow them to withdraw their funds according to their account status (tier) without any further trouble.
Cryptsy’s troubles are compounded by the fact that they have left no contact information regarding their new offices. The Bitcoinist reports that the anonymous source did not see any notices at their old headquarters that indicate where they have moved to. The same source claims that Cryptsy did not tell the building manager either where they were moving to. Suddenly the ghosts of Mt Gox are becoming pretty real for Cryptsy clients.
Official Response and Oversight
In all fairness, Cryptsy should be allowed to respond to the accusations with an official communiqué. Our team has not seen any official statement from the company regarding these accusations. There is only a Tweeter feed from Vern, the company’s founder, announcing various server problems since November 2015.
Cryptsy claims to be registered with the US department of treasury’s Financial Crimes Enforcement Network, or FinCEN. This allows Cryptsy to report on suspicious transactions for money laundering purposes and other alleged criminal activity. However, there is no indication on Cryptsy’s website about financial oversight regarding its own operations. This highlights the importance of oversight and regulation in the realm of cryptocurrencies. Users should be able to trade cryptocurrency freely knowing that their funds will be available to them when they want to withdraw them, and some kind of trustworthy external agent should be able to verify and enforce the user’s rights in case a company violates them.
Avoiding Future Trouble
Given the nature of the Bitcoin community and the character of many cryptocurrency traders, it might be difficult to make a point for government oversight. The community and its members should come up with their own mechanisms of checks and balances then to prevent these things from happening. In the meantime, Cryptsy has a whiff of Mt Gox and the Bitcoin community may end up facing another embezzlement scandal once again. We hope Bitcoin and cryptocurrency users out there learn the lesson and stay safe, while we wait and see how the Cryptsy saga unravels.