Newnote sued by Cointrader.net customers
Newnote Financial Inc. and its CEO, Paul Dickson, are defendants in more than one lawsuit arising from the demise of its bitcoin trading website. Former customers are seeking the lost value of their accounts.
NEWNOTE FINANCIAL Corp. and its chief executive officer, Paul Dickson, have landed in a heap of litigation over the demise of Newnote’s bitcoin trading site, Cointrader.net. At least three customers have filed lawsuits against the company over lost bitcoins. For its part, Newnote denies that it owes the customers anything, and says that it shut down its bitcoin site after a security breach.
The lawsuits come after the demise of Cointrader.net in March, 2016. Just one year earlier, Newnote had acquired the site for $1.5-million in cash and shares. When it announced the acquisition Newnote touted the site as a “leading North American bitcoin exchange” and said it was signing up over 1,000 new users per month. The site was processing more than $1.5-million in bitcoin transactions each month as well, the company said.
Newnote then abruptly shut the site down on March 29, 2016. It cited rising maintenance costs and lower trading volume (and at the time made no mention of any security troubles). It said that users with balances remaining were “being settled” and would have their accounts closed.
It appears that the shutdown has not been going entirely smoothly, however. More than one customer has taken the company to court seeking the return of bitcoins. So far, it appears that none have received a satisfactory response.
The most recent is a Vancouver man named Kenneth Charles Craig. In a notice of claim filed in the Supreme Court of British Columbia on Sept. 8, 2017, he explains how he has met with nothing but difficulty in recovering his money. The troubles, as described by Mr. Craig, go back to his purchase of 9.75 bitcoins through Cointrader.net. He says that subsequent to his purchase, Cointrader.net was acquired by Newnote. Initially, he thought his deposit was secure. He claims to have rece iv e d as s u ran c es from Newnote and Mr. Dickson to that effect.
Then, at some point in 2016, Mr. Craig attempted to access his account but was unable to, the suit states. He says that he discovered Newnote had closed down the site. He claims that he never received any contact from the company. Mr. Craig further says that he has spoken with other Cointrader.net customers who are in a similar situation.
The problems, as described in the suit, continued despite Mr. Craig’s repeated attempts at talking to Mr. Dickson. He says that he was never able to get a “straight answer.” Mr. Craig claims that he even went to Mr. Dickson’s office in Vancouver where Mr. Dickson said that he “couldn’t talk about it as he was being sued.”
Mr. Craig is seeking the court-ordered return of his bitcoins, which he says are valued at $5,600. Mr. Craig
filed the lawsuit on his own, without a lawyer.
Newnote has not yet responded to Mr. Craig’s lawsuit, but the company has responded to two other similar suits against it. The other lawsuits come from a Vancouver man named Bryce Paschenik and a Britannia Beach man named Richard Kagerer. They are seeking payments of $11,108 and $14,214. (Mr. Kagerer only sued Newnote, while Mr. Paschenik and Mr. Craig are suing the company and Mr. Dickson.)
In response to those lawsuits, Newnote said that it suffered the loss of approximately 100 bitcoins after a security breach. As a result, it could no longer operate the Cointrader.net site. The company claimed that it subsequently reimbursed all of the users that it could verify. Mr. Kagerer and Mr. Paschenik were not among those users with verified claims, according to the company.
A judge has yet to decide any of the lawsuits.
Newnote no longer trades in Canada, the Canadian Securities Exchange having delisted the company on Nov. 16, 2016. The company has a listing on the OTC Markets, but has not traded there since 2015.
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