CRYPTSY stopping withdraw locking accounts without notifying users! Class Action

Quote from: digitalxsux on December 13, 2016, 04:28:10 AM

Hi All,

You'll be happy to know these pricks are being sued by at least one person -

http://www.lawsuitdata.com/lawsuit-data/natures-of-suit/contract-lawsuits/other-contract/new-york-southern-district-court/0000974463/digital-cc-usa-llc-v-witenberg-investment-companies-inc-et-al/officially-filed-court-documents/

I have purchased one of the documents but can't upload to this forum.

Any ideas how to do that? I'd be happy to share it so you don't need to pay.

I know that at least one other shareholder met with the law firm representing Witenberg and they stated shareholders have a very strong class action case.

Here's the PDF formatted into a readable post:

Quote

Defendants, by their undersigned counsel, answer the Amended Complaint of Plaintiff as follows:

NATURE OF THIS ACTION

1. Denied.

JURISDICTION AND VENUE

2. Admitted.
3. Admitted.
4. Admitted.
5. Admitted.
6. Admitted.
7. Admitted.
8. Admitted.

GENERAL AND FACTUAL ALLEGATIONS

9. Denied.
10. Admitted.
11. Denied.
12. Denied.
13. Admitted.
14. Admitted.
15. Admitted.
16. Admitted.
17. Denied.
18. Denied.
19. Defendants lack sufficient information to respond to this allegation; it is therefore deemed denied.
20. Denied.
21. Denied.
22. Denied.
23. Denied.
24. Denied.
25. Denied.
26. Denied.
27. Denied.
28. Denied.
29. Denied.
30. Denied.
31. Denied.
32. Denied.
33. Denied.
34. Denied
35. Admitted.
36. Denied.
37. Denied.
38. Denied.
39. Denied.
40. Denied.
41. Denied.
42. Admitted.
43. Defendants lack sufficient information to respond to this allegation; it is therefore deemed denied.
44. Denied.
45. Admitted.
46. Denied.
47. Denied.
48. Denied.
49. Defendants lack sufficient information to respond to this allegation; it is therefore deemed denied.
50. Denied.

COUNT I – BREACH OF CONTRACT/AGREEMENT

51. Admitted.
52. Admitted.
53. Denied.
54. Admitted.
55. Denied.
56. Denied.
57. Denied.
58. Denied.
59. Denied.
60. Denied.¹

¹ Defendants are not responding to the remaining paragraphs in the Amended Complaint as the remaining claims were dismissed on July 28, 2016.

AFFIRMATIVE DEFENSES

First Affirmative Defense
(Breach of Contract by Plaintiff)

61. Plaintiff agreed to rollover Bitcoin positions for Witenberg Investment Companies, Inc. (hereinafter “WIC”) in exchange for WIC’s participation in and contributions to a Joint Venture Company (“JVC”).

62. WIC performed its duties as agreed by the parties with regards to the JVC.

63. Digital failed to rollover WIC’s positions in accordance with this agreement.

Second Affirmative Defense
(No Breach of Contact)

64. Plaintiff agreed to rollover Bitcoin positions for WIC in exchange for its participation in a JVC.

65. WIC performed its duties in service of the JVC in accordance with agreement of the parties.

Third Affirmative Defense
(Unclean Hands)

66. Plaintiff agreed to rollover Bitcoin positions for WIC in exchange for its participation in a JVC.

67. WIC performed its duties in service of the JVC in accordance with the agreement made by the parties.

68. Digital failed to rollover WIC’s Bitcoin positions as it had agreed.

69. Digital also breached the agreement made by the parties and denied WIC its interest and rights in the JVC.

Additional Defenses Reserved

70. Defendants hereby give notice that they may rely on other defenses if and when such defenses become known during the course of litigation, and hereby reserve the right to amend their Answer to assert any other defenses as they become known.

COUNTERCLAIMS

1. Digital’s conduct, in concert with the conduct of Counterclaim Defendant Digital’s Executive Chairman and Founder Zhenya Tsvetnenko, has had the multi-pronged effects of (a) fraudulently inducing WIC to perform work for which it had no intention of compensating him, (b) violating WIC’s contractual rights, (c) unjustly enriching Digital at WIC’s expense and (d) forming the basis of a conspiracy in violation of the Racketeer Influenced & Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968.

JURISDICTION AND VENUE

2. This is an action for damages in excess of $75,000.00, exclusive of prejudgment interest, court costs and attorney’s fees, and is within the jurisdictional limits of this Court pursuant to 28 U.S.C. § 1332(a).

3. Digital is a Delaware limited liability company with its principal place of business in Hingham, Massachusetts.

4. No members of Digital are citizens of the State of New York.

5. Witenberg Investment Companies is a California corporation transacting, operating, and conducting business in the State of New York. Witenberg Investment Companies is engaged in substantial activity within the State of New York, and a substantial part of the events giving rise to this action occurred or were to occur in New York, New York.

6. William Witenberg is a citizen of the State of New York.

7. Zhenya Tsvetnenko is, upon information and belief, a citizen of Australia residing in the city of Perth.

8. This Court has jurisdiction over the parties and the subject matter of this action, and venue is proper pursuant to 18 U.S.C. § 1391(b) and (d), as Witenberg Investment Companies is engaged in substantial activity within the State of New York, and a substantial part of the events giving rise to this action occurred or were to occur in New York, New York.

ADDITIONAL PARTY

9. Zhenya Tsvetnenko, believed to be a citizen of Australia and resident of Perth, was the Founder and Executive Chairman and founder of Digital BTC, an Australian corporation that is the parent corporation of Digital’s U.S. subsidiary, Plaintiff and Counterclaim Defendant Digital CC USA LLC. He acted on behalf of both the Australian parent and Digital CC USA LLC as he took a central role in forming the JVC discussed below. After being indicted by the U.S. Attorney for the Southern District of New York in July 2016, he was ousted from all official roles at Digital.

STATEMENT OF FACTS

Witenberg Investment Companies’ Relationship with Digital CC USA

10. William Witenberg initially bought bitcoins from Digital in or about August 2014.

11. In October of 2014, Digital informed William Witenberg that it would no longer do business with individuals.

12. At this time, WIC became a client of Digital, replacing Witenberg.

13. As a new client, WIC filled out “know your customer” forms memorializing this relationship. Attached to those forms were copies of WIC’s registration as a California corporation.

14. In addition to the “know your customer” forms, Digital filled out an IRS Form 8300, under penalty of perjury, identifying WIC as its client.

15. William Witenberg did not personally purchase any Bitcoins after this change.

16. After this change, all invoices produced by Digital were made out to WIC and all payments were made by means of checks on which WIC was the paying party; upon information and belief, Digital has in its possession copies of these checks, though it failed to include them as attachments to its complaint.

17. Shortly after WIC became a client, Digital approached Witenberg, asking him to personally guarantee the business of WIC.

18. Witenberg declined to sign a personal guarantee for WIC, and WIC continued to be a client of Digital.

19. From October 2014 forward, all interactions between WIC and Digital, including invoices and discussions with the Digital trader, made plain that all trading was being conducted in the corporation’s name.

20. Through WIC’s business dealings with Digital, Witenberg became acquainted with Tsvetnenko.

21. In or about April 2015, Tsvetnenko, along with other Digital personnel, approached Witenberg and asked him to assist the company in forging new relationships and identifying potential business partners, focusing on Latin America and the Caribbean.

22. Digital asked Witenberg to find partners in Latin America for Digital’s remittance business, branded as “AirPocket,” as he had relationships with substantial businesspeople and companies in the region.

23. To undertake this venture, Digital and WIC, along with others, formed a JVC.

24. The terms and scope of the JVC were reached through in-person meetings and in email traffic, including multiple emails sent by Tsvetnenko referring to Witenberg as “JV partner,” detailed plans for the public rollout of the JVC and a schedule for upcoming meetings and marketing efforts to be undertaken by the JV partners, including Witenberg.

25. Under the terms agreed to by the JVC partners, WIC was given an ownership interest in the JVC.

26. As WIC was working with Digital on the JVC, Digital and WIC agreed to change the manner in which WIC and Digital traded Bitcoins.

27. Digital and WIC agreed that WIC’s trading would thereafter be governed by a rollover policy. Under this new agreement, Digital would send new Bitcoin to WIC, and WIC would then pay for previously acquired Bitcoin.

28. Under the rollover policy, both sides benefited: WIC was not required to use additional capital in order to trade Bitcoins, and Digital continued to receive substantial commissions, as WIC was easily one of Digital’s largest clients by trade volume. The arrangement allowed Digital to generate much-needed revenue by permitting it to sell to WIC Bitcoins upon the maturity date of any previously held position.

29. On May 12, 2015, Digital issued a press release announcing the JVC. The press release, quoting Tsvetnenko at length, highlighted Witenberg’s involvement and relevant business background, as well as the involvement of several other partners that Witenberg brought to the Joint Venture.

30. Subsequently, Digital’s share price skyrocketed, increasing in value approximately 300% almost immediately upon the announcement of the JVC.

31. On May 21, 2015, an article in Bitcoin Magazine reported that Digital had raised $3.5 million AUD to support the JVC. Tsvetnenko was quoted: “[t]he quality of the joint venture team provides strong validation of the commercial potential for AirPocket and I’m confident they are the right people to execute the business strategy in Latin America and the Caribbean and capitalize on the huge potential to disrupt the multi-billion dollar remittance market.”

32. Fulfilling its obligations under the JVC, WIC helped secure very significant business partners for Digital in Latin America. Digital, first working through Tsvetnenko and now for just itself, has exploited these efforts undertaken by WIC on behalf of the JVC, and it continues to reap significant benefits from those efforts even today.

33. In fact, as evidenced by Digital’s latest Quarterly Report, dated October 31, 2016, the business ventures secured as a result of the JVC comprise the majority of Digital’s business and are expected to be the primary driver of its future earnings.

34. For example, upon information and belief, WIC worked alongside another JVC partner to forge the JVC’s relationship with Jorge Nicolau, paving the way for Digital’s agreement with global telecommunications giant Telefonica to market Digital’s AirPocket software to a segment of its approximately 230 million Telefonica-connected mobile devices.

35. More recently, Digital has announced a partnership with AT&T Mexico, which aims to significantly grow revenues related to the AirPocket application.

36. Despite benefiting from the business brought in to the JVC by WIC, Tsvetnenko and Digital decided to exclude WIC from the JVC despite WIC playing a central role in developing the relationships that have resulted in much of Digital’s business in Latin America, and Digital has failed to compensate WIC for its central role in forming and advancing the commercial interests of the JVC.

37. Simultaneously, Digital breached the rollover agreement it had reached governing WIC’s trading of Bitcoins, and demanded payment immediately. The rollover agreement had been an integral part of WIC’s decision to partner with Digital (and others) in the JVC.

38. Through this sequence of actions, Digital breached the terms of the Joint Venture, breached the rollover agreement and wrongfully withheld from WIC its rightful share in the JVC.

39. Almost immediately after trying to deprive WIC of its share of the JVC, Digital brought this suit in attempt to further unjustly enrich itself and to deprive WIC of its rights.

40. In early July of 2016, it was announced that Tsvetnenko had been indicted by the United States Attorney’s Office for the Southern District of New York.

41. The indictment charges Tsvetnenko for his participation in a scheme to charge mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages without the customers’ knowledge or consent—a practice known as “auto-subscribing.”

42. The indictment alleges conspiracy to commit wire fraud and mail fraud, in violation of Title 18 U.S.C. §§ 1343 and 1341; wire fraud, in violation of 18 U.S.C. §§ 1343 and 1342; and conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i).

43. Tsvetnenko’s indictment led to his termination from Digital, and the disruption has harmed Digital and—by extension—the JVC as well.

44. In addition, the indictment points up a pattern of fraudulent activity undertaken by Tsvetnenko, in which he employs various entities and devices—Digital among them—to defraud his various victims.

Digital’s Bad-Faith Filing of this Complaint

45. In its initial filing of the Complaint, Digital knowingly misrepresented the facts at issue in this matter. For example, it misstated the facts concerning the history of its invoices, claiming that Defendants “never denied that Digital provided Bitcoins to Witenberg as set forth in Composite Exhibit ‘A.’”

46. In truth, Defendants have a thorough record of communications between Plaintiff and Defendants regarding the errors in several invoices.²

FIRST COUNTERCLAIM

Fraudulent Inducement

47. Counterclaim Plaintiffs re-allege and incorporate by reference the allegations contained in the preceding paragraphs.

48. Digital has repeatedly misrepresented to the Court the facts of the case, and Tsvetnenko and Digital have engaged in a pattern of deception in their business dealings with WIC concerning both the JVC and the rollover agreement.

49. Counterclaim Plaintiffs reasonably relied upon the Joint Venture and rollover agreements when entering into those business relationships with Digital.

50. WIC has been damaged by the breach of the Joint Venture and rollover agreements as well as deprived of its ownership interest in the JVC and income associated with that venture.

51. If Counterclaim Plaintiffs had known Digital and Tsvetnenko never intended to adhere to the Joint Venture and rollover agreements, WIC would never have entered into any agreements with them, let alone undertaken the extensive efforts on behalf of the JVC that it did.

52. As a result of Tsvetnenko and Digital’s fraudulent inducement of WIC, Counterclaim Plaintiffs have suffered damages in an amount to be adduced at trial.

53. As such, Tsvetnenko and Digital should be held accountable for their fraudulent behavior toward WIC.

² Such communications took place August 14, 2015 and were again forwarded to Plaintiff in a letter dated August 31, 2015.

SECOND COUNTERCLAIM

Unjust Enrichment

54. Counterclaim Plaintiffs re-allege and incorporate by reference the allegations contained in the preceding paragraphs.

55. Digital has benefited from the work of WIC in making the JVC possible and successful, both through revenues it would never otherwise have received and through a very substantial boost to Digital’s stock price.

56. Digital has breached the terms of the Joint Venture and Digital is still benefitting from this breach at the expense of WIC.

57. Equity and good conscience require restitution for WIC.

58. As such, Digital should be held accountable for the unjust enrichment from which it benefited, and restitution should be provided to WIC.

THIRD COUNTERCLAIM

Breach of Contract

59. Counterclaim Plaintiffs re-allege and incorporate by reference the allegations contained in the preceding paragraphs.

60. Digital entered into two interrelated contracts with WIC: 1) the rollover agreement for Bitcoin trading; and 2) for the JVC business venture. WIC would not have done one without the other.

61. WIC paid real monies for Bitcoins tendered, and reasonably relied upon the rollover agreement for subsequent trading of Bitcoins.

62. Pursuant to the terms of the Joint Venture, WIC contributed very substantial effort to merit its share in the JVC, introducing two substantial Latin American businessmen to the project.

63. Digital, acting first through Tsvetnenko and later on its own, intentionally breached both of these contracts by: 1) discontinuing the rollover of Bitcoins for WIC; and 2) denying WIC its rights under and share of the JVC.

64. WIC has suffered economic and reputational damage as a result of these breaches, and Tsvetnenko and Digital should be held accountable for those damages.

65. As a direct and foreseeable result of Tsvetnenko and Digital’s intentional conduct, Counterclaim Plaintiffs request damages in an amount to be adduced at trial.

FOURTH COUNTERCLAIM

Violation of Racketeer Influenced & Corrupt Organizations Act,
18 U.S.C. §§ 1961-1968

66. Counterclaim Plaintiffs re-allege and incorporate by reference the allegations contained in the preceding paragraphs.

67. Section 1962(c) of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c), prohibits any person associated with an enterprise engaged in interstate commerce (a “RICO Enterprise”) to participate in the conduct of such RICO Enterprise’s affairs through a pattern of racketeering activity. Section 1964(c) of RICO, 18 U.S.C. § 1964(c), provides for a private right of action for treble damages.

68. The association-in-fact among Defendants Digital and Tsvetnenko (the “RICO Conspirators”) is a RICO Enterprise. One of the purposes of the RICO Enterprise was to unjustly enrich its co-conspirators while cheating Counterclaim Plaintiffs out of their fair share of JVC revenues.

69. The scheme described in this Counterclaim, including the enterprise’s fraudulent activity with regard to fraudulent text-messaging charges, first began in 2011 and continues to the present.

70. The multiple acts and omissions in violation of 18 U.S.C. §§ 1341 and 1343 and in violation of 15 U.S.C. §78j(b) constitute a “pattern of racketeering activity” within the meaning of 18 U.S.C. § 1961.

71. In furtherance of their scheme and artifice to defraud, the RICO Conspirators used the United States Postal Service, private or commercial interstate carriers, and wire communications in interstate commerce to commit multiple violations of the mail and wire fraud statutes of the United States, 18 U.S.C. §§ 1341 and 1343. In furtherance of a scheme or artifice to defraud, and with specific intent to defraud, Defendants knowingly used or caused to be used the mails or wire communications in violation of 18 U.S.C. § 1341 and/or 18 U.S.C. § 1343.

72. Among the wire and mail communications (including mailings and deliveries) by the RICO Conspirators in furtherance of this scheme were:

a. communications from the RICO Conspirators to Counterclaim Plaintiffs in which the RICO Conspirators fraudulently represented the JVC and rollover agreements;
b. interstate wire transfers to disburse funds derived from the fraudulent scheme;
c. communications and correspondence between and among the RICO Conspirators to develop and carry out the fraudulent scheme; and
d. solicitation of business partners through the JVC.

73. By reason of the foregoing, the RICO Conspirators have conducted the affairs of the RICO Enterprise through the aforementioned pattern of racketeering activity, and have violated § 1962(c) of RICO.

74. As previously alleged, the business and property interests of WIC have been damaged by reason of the RICO Conspirators’ racketeering activity.

75. The direct result of the racketeering activity described above has been to deprive WIC of rights and assets rightfully belonging to WIC.

76. Accordingly, Counterclaim Plaintiffs seek treble damages, recovery of the costs of this action, and an award of reasonable attorney fees as provided by the federal RICO statute, 18 U.S.C. § 1964(c).

FIFTH COUNTERCLAIM

Conspiracy to Violate the Racketeer Influenced & Corrupt Organizations Act,
18 U.S.C. §§ 1961-1968

77. Counterclaim Plaintiffs re-allege and incorporate by reference the allegations contained in the preceding paragraphs.

78. The RICO Conspirators formed a conspiracy for the purpose of achieving and profiting from the racketeering activities described herein in violation of 18 U.S.C. § 1962(c).

79. As described herein, each of the RICO Conspirators knowingly and intentionally agreed and conspired to commit at least two of the predicate acts set forth above and they did so with the knowledge and intent that such acts were in furtherance of the foregoing pattern of racketeering.

80. As described herein, the conspiracy of the RICO Conspirators substantially affected interstate commerce as much of the conduct that formed the overt acts of the conspiracy involved interstate commerce, and the damage caused by the conspiracy has harmed a corporation that itself substantially affects interstate commerce.

81. As a direct and proximate result of the conspiracy in violation of 18 U.S.C. § 1962(d) as described herein, WIC has been injured in its business and property.

PRAYER FOR RELIEF

WHEREFORE, Defendants pray as follows:

1. That Plaintiff take nothing by reason of its Amended Complaint and that judgment be rendered in favor of Defendants;

2. That Defendants be awarded their legal fees and all other costs incurred in defense of this action;

3. That Counterclaim Plaintiffs be granted all relief available to them by virtue of their Counterclaims; and

4. For such other relief as the Court deems proper.