Bitcoin to Gold company Coinabul, a company that claims to be “The first Bitcoin to gold service,“, is facing a ‘Class Action’ lawsuit alleging that the company has been involved in committing fraud. On a personal level, I bought .76 Bitcoin worth of gold on may 3rd, and I’m still waiting. Yazan Hussein claims that he paid 1,654.54 bitcoins to Coinabul last year and has, up to date, received no gold. He filed the Federal complaint in Illinois on July 25th naming Coinabul and its CEO, Jason Shore, as defendants.
Edelson Law, the firm involved in the class action against Mt Gox, is representing Mr. Hussein in the class action. Chris Dore, a partner at Eldeson, states:
“Once we were contacted by our client, we looked into it, and this problem [is] widespread. There are countless complaints of people having the same experience where suddenly they stopped responding and stopped sending any product in exchange for the bitcoins. We did file it as a punitive class action, and we do intend to pursue it as a class.”
Eldelson claims that Coinabul shipped the most recent precious metals as far back as June 2013. They have however continued to take Bitcoin payments and simply not send out stock, thereby committing a fraud. It is stated that they have, over this period, received millions of dollars in payments, made by customers acting in good faith.
Dore went on to explain: “Defendants run an online marketplace called ‘Coinabul’ where consumers may exchange ‘bitcoins’ – a new form of digital currency – for physical denominations of silver or gold. Unfortunately, rather than delivering the metals promised to their customers, defendants chose to capitalize on the lack of effective regulatory oversight in this burgeoning industry, and instead defrauded their customers out of millions of dollars worth of bitcoins.”
My own experience of Coinabul is small change, I bought gold successfully from Bitgild and also from Agora Commodities, there were no problems. I placed a small order with Coinabul and after a month or so, sent an email, they assured me that the order would be dispatched in the immediate future. The order has not, and will not, arrive. The problem with companies like Coinabul is that they give legitimate businesses a bad name. I am contemplating joining the class action. Coindesk has a copy of the full lawsuit here. There is a strong case for research in online purchases. I have written about this before here.
Perhaps Eldelson Law is a company that finally recognizes the need to represent the cryptocoin community. If they are, they may well make quite a bit of money out of the cases that will come to their door. Edelson Law is pursuing the action as a civil matter to make sure that all defrauded bitcoins are returned to their rightful owners.
Strangely enough, although Coinabul has stopped shipping orders their website continues to update their gold and silver prices as well as taking, and not refunding the bitcoins they receive in payment. Good luck defending the class action lads.