Coinbase Faces Backlash, Legal Risk Over Bitcoin Cash

olubams

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Quote from: CryptosapienZA on August 02, 2017, 05:33:59 AM

Someone woke up and realised the shitcoin is worth alot of money after all. hahahaha This is some dumb shit. Grin

http://fortune.com/2017/07/31/bitcoin-fork-coinbase/

The world's most popular digital currency exchange, Coinbase, is under fire from angry customers over its decision not to support a new version of bitcoin that could also make it vulnerable to "ruinous legal trouble," according to a prominent legal scholar.
Coinbase's headaches are tied to a breakaway faction of bitcoin miners, who are responsible both for generating new coins and for the software called blockchain that is used to record transactions. On August 1, the miners will implement a software update that will create a so-called "fork" and result in two versions of the bitcoin blockchain—and two forms of the currency as well.
The creation of the new currency means every existing bitcoin holder is entitled to an equal amount of what the breakaway miners call "Bitcoin Cash." Coinbase's decision against supporting the new version, however, means its customers will not receive this benefit.
This is significant because the new Bitcoin Cash is expected to be worth real money. As of July 31, futures markets predict a unit of the new currency will be worth hundreds of dollars.
This has led customers to post angry messages on Coinbase message boards, accusing the company of stealing their property and threatening class action lawsuits.
Such a lawsuit may not be far-fetched, according to Tim Wu, a prominent legal scholar who writes extensively about technology. In a series of tweets, he likened Coinbase's decision to a broker withholding shares from its customers.

I dont see anyway how Coinbase will be held liable in this kind of action because I believe they would have issued a statement in that regards concerning their position for not supporting the BCC and no client of them can force them to offer the services they are not offering. You owe it as a responsibility to yourself to move your coin out of sites not supporting BCC before the fork because you have been notified and no one should be held responsible for your inactions. But from recent news, it seems they are caving in.

Rising Suns

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From https://blog.coinbase.com/update-on-bitcoin-cash-8a67a7e8dbdf

Quote

Over the last several days, we’ve examined all of the relevant issues and have decided to work on adding support for bitcoin cash for Coinbase customers. We made this decision based on factors such as the security of the network, customer demand, trading volumes, and regulatory considerations.
We are planning to have support for bitcoin cash by January 1, 2018, assuming no additional risks emerge during that time.
Once supported, customers will be able to withdraw bitcoin cash. We’ll make a determination at a later date about adding trading support. In the meantime, customer bitcoin cash will remain safely stored on Coinbase.

silkylove

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I could see that point about property if coinbase didn't have information about their fork policy in their terms of service and if they hadn't put a huge notice on the front-page weeks before about users moving their coin if they want to access bitcoin cash. It will be impossible to prove that they didn't operate in good faith.

kokojie

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Quote from: krishnapramod on August 02, 2017, 08:06:55 PM

Coinbase is one of the largest cryptocurrency exchanges. BCC is an altcoin which currently has no real world usage and with the current hash rate there is uncertainty about how long it would survive, at least it would be extremely volatile in the next few weeks. Even Coinbase added Ethereum after an year of its launch so IMO I don't think Coinbase did anything wrong by not adding just another altcoin which is yet to prove its mettle.

There was a flash crash of Ethereum in June on GDAX and taking full responsibility they gave out $1 million to cover traders losses when in fact it wasn't GDAX's fault, blame the extreme volatility of altcoins. A similar crash would have happened if Coinbase/GDAX had added support for BCC soon after its launch, another flash crash and then there would have been another backlash for reimbursement.

Coinbase had given the users the choice to withdraw funds if they wanted to access BCC so nothing to blame them for. Yeah Coinbase would face legal implications if they sell users BCC or enable BCC trading without crediting users with the BCC they deserve.

Quote

Coinbase does not intend to support or interact with the UAHF chain. If this were to change, Coinbase would make those coins available for customers to withdraw, not keep them.

https://support.coinbase.com/customer/portal/articles/2844217-uahf-uasf-faq

It does not matter whether Coinbase think BCash is good or bad, Coinbase controls private key on behalf of their customers, since Coinbase does not provide the actual key to their customer, it's their duty to properly manage the private keys for their customers.

BCash was airdropped to private key coinbase controlled, which were rightfully owned by their customers. Therefore, as long as BCash has any non-zero value, coinbase have a duty to provide their customers with access to their rightfully owned property. Doesn't matter whether coinbase view BCash as good or bad, it's not their property to hold, it's their customer's property.

krishnapramod

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Coinbase is one of the largest cryptocurrency exchanges. BCC is an altcoin which currently has no real world usage and with the current hash rate there is uncertainty about how long it would survive, at least it would be extremely volatile in the next few weeks. Even Coinbase added Ethereum after an year of its launch so IMO I don't think Coinbase did anything wrong by not adding just another altcoin which is yet to prove its mettle.

There was a flash crash of Ethereum in June on GDAX and taking full responsibility they gave out $1 million to cover traders losses when in fact it wasn't GDAX's fault, blame the extreme volatility of altcoins. A similar crash would have happened if Coinbase/GDAX had added support for BCC soon after its launch, another flash crash and then there would have been another backlash for reimbursement.

Coinbase had given the users the choice to withdraw funds if they wanted to access BCC so nothing to blame them for. Yeah Coinbase would face legal implications if they sell users BCC or enable BCC trading without crediting users with the BCC they deserve.

Quote

Coinbase does not intend to support or interact with the UAHF chain. If this were to change, Coinbase would make those coins available for customers to withdraw, not keep them.

https://support.coinbase.com/customer/portal/articles/2844217-uahf-uasf-faq

IamHigh

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Quote from: Elder III on August 02, 2017, 06:43:33 PM

People snoozed and they lost... any individual's failure to pay attention to their finances is not the fault of Coinbase. Coinbase very clearly stated many days in advance what they would and would not do in regards to BCH. Nobody has any right or reason to whine about it now.

This is very correct, but this doesn't change the fact that coinbase would steal and sell the users' bcc on different exchanges without asking them and not giving them even one cent at the end.

I'm happy for this, hopefully the law penaltise coinbase very very very HARD!

Savik

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It will be an interesting case to see the legal ownership of crypto assets. People had BTC in a Coinbase account and BCH was given to the owner of that BTC. Who owns the BTC that sits in Coinbase's account?

ladydark

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Quote from: BTCLovingDude on August 02, 2017, 05:37:15 AM

this is complete nonsense.
coinbase never hid the fact that they are not supporting bitcoin cash and never forced anyone to hold their bitcoins there.
a very long time ago so that there is enough time for anyone to do a withdrawal, they clearly and publicly announced they will not support bitcoin cash and also they clearly said withdraw your bitcoins if you are not happy about our decisions.

i am sorry to say this but anyone who is angry now is an idiot and they should be angry at themselves.

and besides it is way too soon to start cheering about bitcoin cash price. let a couple of weeks go by then talk about its price!

Coin base as well as other exchanges have already clearly announced that they would not support BCC and so its the user's responsibility that if he wants free BCC,then he should withdraw his bitcoins and deposit in any other exchange which supports BCC.But they have not done that and now blaming coin base on seeing BCC's high price is not fair.

Elder III

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People snoozed and they lost... any individual's failure to pay attention to their finances is not the fault of Coinbase. Coinbase very clearly stated many days in advance what they would and would not do in regards to BCH. Nobody has any right or reason to whine about it now.

avikz

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That's not good because I believe coinbase has made it clear from the beginning that they are not going to support BCC. The people who are angry, is just trying to make some extra money because now they have realized that BCC is also valuable. So they lost the chance to receive free money.

Also coinbase has not stopped anyone from transferring their money to a different location in order to get BCC. This is utter non sense by some greedy people. I too have a little amount of bitcoin over there. People need to be more sensible and updated with the current news.

Nougat

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I don't care what notices they put on the site. If you look at the actual economic effect of what they did, it looks like pretty brazen theft. A jury would likely see it that way too. I bet a lawyer could draw similarities to securities law where an account holder has a right to dividends and splits. What if E-Trade said "we will not support Google C shares, so you should withdraw certificates before the split.?

The key thing here is "not supporting" does not mean that Coinbase did not receive the BCH coins themselves, they just decided not to allocate them to their customers.

I removed all my coins to my personal core wallet before the fork so this is not sour grapes talking. I'm just astonished at how they think they will get away with this without any consequences.

okbit

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Coinbase has everyone's private keys. The BCC is there and should be sent to the owners of the wallets.

tvbcof

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Glad to see the Coinbase is not participating in the Bitcoin-Trash scam. Hell, maybe I'll even use there services again at some point in the future. For now I'm satisfied to be pig-headed about handing them an identity theft kit that they can 'lose' when it is profitable to do so. In the mean time it is funny to watch the puppet theater where Coinbase pretends to withhold info from the bad bad Feds and the bad bad Feds pretends to try to make them hand it over.

WRT BCC, I'll look forward to hearing the plantif's attorney complaining that Coinbase was unwilling to support that particular pump-n-dump scam. That should be good for a laugh.

Bitforking

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well coinbase has to give a satisfying answer to all users on their exchange, or their business will face the consequences befor ethe next forking in November.

brampower

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I am not sure how things will go out in the end,they have already notified what their stand is regarding the fork and i think it will favor them when they reach the court and the user has to understand the risk even after the warning,so i do not think this will make any changes as i am sure that coinbase will inform they pose a security risk in accepting the forked coins to their wallets. Wink

Bitcoin Guy

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Quote from: sylance on August 02, 2017, 07:37:49 AM

I agree that Coinbase shouldn't be held responsible for supporting BCC since they were very early and clear on their position. However, there is an argument to be made for those trying to get their coins out and transfers taking multiple days. I don't believe it warrants legal action but jeez... transfers taking over a day is crazy.

I am not a lawyer, but the fact that it might take multiple days to complete the transfers may be the main "selling" point on what the class action lawyers will be shooting for. After knowing that many transactions were delayed, some customers at that time may be afriad to execute the transfers afterward because of they were afriad to have their coins stuck in the middle when the fork took place.

ajmalhuuss

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I can understand the frustration seeing BCC skyrocket causes Coinbase users but I do not think any lawsuit can hold up.
1) Coinbase made it a point to notify its user base of its decision to not support BCC and to allow any user enough time to pull their BTC out.
2) Anyone who signs up for an account on Coinbase agrees to the terms and conditions of Coinbase which state, "The Hosted Digital Currency Wallet services are available only in connection with those Digital Currencies that Coinbase, in its sole discretion, decides to support."
3) For those frustrated with it taking a whole day for their funds to be transferred, Coinbase also states, "it may be necessary for Coinbase to retrieve certain information from offline storage in order to facilitate a Digital Currency Transaction in accordance with your instructions, which may delay the initiation or crediting of such Digital Currency Transaction for 48 hours or more. You acknowledge and agree that a Digital Currency Transaction facilitated by Coinbase may be delayed." in their terms and conditions.

giveen

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No use of a lawsuit eventually they will simply spend their money in proving coinbase guilty but at the end no matter what the decision will go in favour of coinbase. According to coinbase terms they don't force anyone to store their bitcoins and second they had informed everyone prior to this event that no bitcoin cash will be given they could have transferred to another wallet prior to this event.

kokojie

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Quote from: tondiego on August 02, 2017, 09:27:23 AM

Correct me if I'm wrong.

But isn't the solution for this to provide all users with their private keys, Coinbase is storing for them? So all users can use them with any other BCH wallet? These BCH coins exists and they won't disappear just because Coinbase doesn't support BCH.

That's effectively allowing withdrawals, and coinbase might as well provide this function within the interface to look professional.

tondiego

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Correct me if I'm wrong.

But isn't the solution for this to provide all users with their private keys, Coinbase is storing for them? So all users can use them with any other BCH wallet? These BCH coins exists and they won't disappear just because Coinbase doesn't support BCH.

Topic: Coinbase Faces Backlash, Legal Risk Over Bitcoin Cash (Read 1762 times)