Let’s explore the strange saga of Cryptsy — a name which may still inspire chills among the early cryptocurrency advocates. If you weren’t playing with digital assets in the between years 2013 and 2016, count yourself fortunate. Cryptsy was something like a digital wild west saloon full of strange altcoins and shady opportunities. (It arrived out of nowhere and all at once was seemingly everywhere, serving as a hub for trading hundreds of obscure cryptocurrencies — so many that most of us had trouble keeping track of them, let alone naming even three of them.) find more
Cryptsy’s platform wasn’t exactly user-friendly. The website was as if patched together on a weekend by someone high on caffeine. Awkward as it might look, it was one of the few haunts in which you could trade obscure coins like Dogecoin, Mooncoin and Feathercoin. Users were gambling with their money, staking their funds with an exchange whose security bordered Swiss cheese.
But weak security wasn’t the only warning sign. Withdrawal times stretched out regularly, and user complaints became a stream. Confidence in the platform was washed away as if it were a sandcastle battered by the tide. The founder, Paul Vernon — online in crypto circles he is often called “Big Vern” — also attracted respect and rancor. For some he was a pioneer of the crypto movement; for others he was the recipient of much less flattering descriptions: scammer, con artist, escape artist.
It all went to hell in January 2016. Without warning, Cryptsy shut down. The site disappeared, and users were locked out of their accounts overnight. An official communique blamed a mysterious cyberattack for making millions in user funds vanish — as if some ghost ship made off with millions in user funds in the darkness of night. True or not, the damage was great. Lawsuits ensued, the F.B.I. became interested, and thousands sought answers on the internet. The entire drama unfolded like a digital bank robbery — except that the bad guys cleared out, leaving the victims holding the bag.
The disaster at Cryptsy left a painful hangover. A lot of the crypto veterans learned the tough but important lesson: Don’t keep your coins on a exchange. These platforms aren’t banks. They have no obligation to send you back your money, and most won’t if something goes wrong, even if it was just a few Garliccoins.
The crash of Cryptsy made everyone in crypto more wary. Today, its demise is recounted as if it were a ghost story passed on to immigrants: a cautionary tale draped in digital lore. If a platform seems sketchy or is making offers that sound too good to be true, it probably is. From the instant you ask, ‘Is this safe?’ — that’s usually your answer. Cryptsy has left a legacy, all right — just not the type anyone had in mind.