KRAKEN FLASH CRASH CLASS ACTION HEADS TO ARBITRATION

In July 2017, Attorney Marc A. Wites of The Wites Law Firm and the law firm Silver Miller commenced a class action lawsuit against cryptocurrency exchange Payward, Inc. d/b/a Kraken (“Kraken”) in the United States District Court for the Middle District of Florida on behalf of a group of aggrieved Kraken accountholders.  The claimants — each of whom maintained margin accounts at Kraken in which they held Ether, among other digital assets — lost significant sums of money in a May 7, 2017 “flash crash” that saw Kraken’s Ether market plummet nearly 75% in value . . . only to see the value restored to nearly its full value an hour later.  During the one-hour crash, however, Kraken forcibly liquidated the claimants’ margin accounts without affording them any opportunity to meet a margin call or even log-in to their accounts, as Kraken’s software systems were inaccessible to the victims during the critical hour in which their accounts got liquidated.

Relying on a set of “take it or leave it” Terms of Service to which each accountholder had to agree when opening his account, Kraken insisted to the federal court that the victims not be allowed to pursue their claims in the public forum provided by the court and that the victims’ dispute instead be handled in a private arbitration forum chosen by Kraken.  Without waiving any of their substantive arguments, the claimants have agreed to shift to the arbitration forum their pursuit for justice, where they have been joined by nearly two dozen other victims of Kraken’s flawed security and faulty software systems.  While Kraken advertises itself as being the “best Bitcoin exchange” and providing “sound and reliable” access and support every hour of every day of the year, the arbitration Statement of Claim alleges that Kraken’s services are not nearly as sound or reliable as advertised, are not available when needed most, and purportedly can be withdrawn by Kraken at any time without any notice whatsoever to the accountholders who serve as the lifeblood of Kraken’s business.  Moreover, the Statement of Claim demonstrates that whenever anything goes wrong at Kraken, Kraken takes no responsibility for those wrongs and instead puts the blame on its accountholders for trusting Kraken to provide the very services and security that Kraken promotes.

Kraken is expected to provide its formal response to the Statement of Claim sometime in November 2017. Kraken’s Terms of Service, however, purport to require that the arbitration hearing is a confidential proceeding conducted by a single arbitrator, not a jury of the victims’ peers.  So, unlike a court case — where any member of the public can come to court and watch the jury trial and other court proceedings — Kraken’s Terms of Service seek to keep Kraken’s other customers, the government, and everyone else in world in the dark about what excuses Kraken will raise and what will actually happen when the trial of this matter occurs in the arbitration forum mandated by Kraken.

Attorney Marc Wites commented that “the Kraken class action represents the very type of case that should be in Court, where the class action rule places individual investors on the same level as large corporations by allowing them to band together.” Unfortunately, Congress has opposed a new rule of the Consumer Financial Protection Bureau which would have required, at least in the future, that such cases be in the open light of day in America’s courts, rather than behind the closed doors of individual arbitration cases”, said Wites.

Marc Wites of Wites Law Firm currently represents the victims in lawsuits against multiple cryptocurrency exchanges (Cryptsy; Coinbase; Kraken).  If you have lost money at a cryptocurrency exchange or are concerned that the services advertised to get you to open an account were not matched by the services actually provided to you as an accountholder, contact Marc Wites or a no-cost, no-obligation consultation to discuss you legal rights.

MARC WITES OF WITES & KAPETAN SECURES $3.6 MILLION DOLLAR SETTLEMENT FOR 3RD GRADE GIRLS SEXUALLY ABUSED 11-YEARS AGO

3.6million-dollar-settlement

Sexual abuse and harassment against women is finally a prevalent topic in today’s news. From Fox News to Harvey Weinstein, from Bill Cosby to Fidelity Investments, strong, professional woman have come forward to face their abusers. For many, it took years of suffering, and unfortunately belated support of the public, to find the strength to come forward.

boca raton signBack in 2005, four third-grade girls in Boca Raton, Florida, found the strength and courage to tell their parents about the sexual abuse they had been suffering at the hands of their third-grade teacher. Little did they know, or could they even appreciate at such a tender young age, their journey and fight for justice would last for 12 more years.

It is often said that the wheels of justice grind slowly. Here, it all began during the 2004-2005 school year, when teacher Blake Sinrod abuse 4 girls in his third grade class, all of South American decent and from families that had only recently moved to the United States. In court papers, the girls are referred to as the Janie Does to protect their identity. As reported in the Sun Sentinel, Sinrod touched them over and under their clothing on their private parts during reading and movie times, and when the other kids were outside at recess.

Unbeknownst to the Janie Does or their parents, this was not the first time Sinrod was accused of engaging in such horrific conduct. Two years earlier, during the 2002-2003 school year, another young girl – this time in Sinrod’s second grade class – of South American decent and with parents with limited English skills – had the courage to tell her parents that Sinrod was abusing her in the same fashion. The next day after telling her parents, they all went to the School to report it. According to the family, the Vice-Principal, however, refused to believe them, and forced the girl to return to Sinrod’s class. Instead, the family removed their daughter from the school, and moved to another county, hoping to avoid any confrontations with Sinrod and to quickly and quietly put the horror behind them.

During the 11-year litigation, the four Janie Doe Plaintiffs grew into young women. Over the years, they were interviewed by the police and government agencies, gave multiple depositions, and sat for a psychological exam given by the School Board’s expert witness. All the while, the case hung over the girls’ heads while it wound its way through Florida’s trial and appeals courts.

Marc Wites - South Florida Personal Injury Attorney-compressed
Marc Wites

Marc Wites and Wites & Kapetan became counsel in the case in 2011. By that time, the civil case was already 5 years old, having been filed in 2006. The criminal case against Sinrod had since been resolved, with Sinrod pleading guilty to a felony count of child abuse, and being forced to give up his teaching license and never again work with or around children. The State Attorney’s Office never explained why it resolved the case in this fashion.

Ultimately, the very school board that they fought against was on their side. Chuck Shaw, Board Chairman of the Palm Beach County School Board, stated at the public meeting approving the deal that “the settlement was absolutely appropriate.” While the School Board offered no explanation or apology for why it took so long to resolve the case, the Janie Does and their lawyer, Marc Wites, are hopeful that the Palm Beach County School Board will pay more careful attention to sexual abuse claims in the future, and, more importantly, take more aggressive steps to prevent such abuse before it occurs.

Media coverage of the case and settlement was widespread. The Sun Sentinel published many articles about the case authored by journalist Scott Travis, and the Sun Sentinel’s Editorial Board called upon the School Board to bane the “blame-the-victim legal defense”, stating that “Taking responsibility for your actions is a lesson we should learn by the time we finish kindergarten.”

As attorney Marc Wites of Wites & Kapetan told People Magazine, “I would just say that it’s unfortunate that it took 11 years of litigation to bring this case to a conclusion…an appeals process was happening simultaneously, so this took a very long time.” In the end, the 3.6 million dollar settlement Wites & Kapetan obtained for their clients is reportedly one of the largest settlements in Palm Beach County School Board history.

The Janie Does hope to leave young girls and women across the country with a message. As detailed by People Magazine, one of the Janie Does explained it this way: “Many victims feel like it’s their fault and that they are accountable for what happened to them in some way. I’m here to say that it’s not your fault, and you are not alone. Don’t be afraid to speak up.”