The cryptocurrency exchange is in hot water again, exacerbating an already tenuous relationship with users. A class action lawsuit was…
The cryptocurrency exchange is in hot water again, exacerbating an already tenuous relationship with users. A class action lawsuit was filed against San Francisco-based Coinbase in recent days in the US Court for the Northern District of California, claiming the leading US cryptocurrency exchange unlawfully kept cryptocurrencies that were sent by email and left unclaimed for years.
Plaintiffs Timothy G. Faasse and Jeffrey Hansen are US residents and filed the complaint on behalf of themselves and others who are estimated to be in thousands, all of whom are being represented by Restis Law in San Diego.
William R. Restis of the law firm that bears his name told CCN:
"These types of issues are simply growing pains for a maturing industry that is moving into the mainstream. Coinbase's failure to deliver was likely an oversight. Hopefully, this lawsuit spurs the company to quickly make things right."
As far as lawsuits go, this one isn't that hostile. Both plaintiffs say they will use Coinbase if their bitcoins are restored.
Faasse and Hansen allegedly missed out on 0.10 bitcoin and 0.01 bitcoin, respectively, that was sent in 2013. The BTC price mostly traded below $1,000 in 2013 until year-end, at which time it had a brief spurt trading above $1,000. The pair didn't claim their funds until this year amid a reminder but were met with a faulty link that wouldn't let them redeem the funds.
According to the filing, Coinbase's egregious behavior is akin to a bank keeping funds from an uncashed cashier's check. In the case of Coinbase, users can send bitcoin, Ethereum, Litecoin and Bitcoin Cash by email, informing the recipient they are getting the funds and providing a link whereby they can create their own user account to redeem funds.
Unfortunately, many of these emails went overlooked prior to the rise of cryptocurrencies in 2017. Instead of returning the funds back to their original owners, the exchange held onto them, the lawsuit alleges.
California's property law is on the side of the investors, the lawsuit says.
"This class action seeks to recover these unclaimed cryptocurrencies and deliver them to the intended recipients, as well as all “forks” thereof (e.g. Bitcoin Cash fork of Bitcoin), and “airdrops” related thereto," the lawsuit states.
What Coinbase should have done, according to the complaint, is to notify the recipients of the newfound bitcoin within 2.5 years of when the funds were received that if left unredeemed, their cryptocurrencies plus interest and dividends would be sent to the state of California. Plaintiffs whose email addresses have since "gone stale" want their assets turned over to the state.
Coinbase's email feature is a convenient way to send cryptocurrencies such as bitcoin, especially for other members of the exchange for whom funds are automatically deposited into their accounts. For non-users, however, it's a different story, and the latest allegations shine a spotlight on another possible flaw in the Coinbase infrastructure.
It also opens the door for similar lawsuits to emerge among users at other exchanges where cryptocurrency funds have yet to be claimed.
Coinbase, meanwhile, just recently faced a similarly sensitive situation in which it blamed a tech glitch at Visa for unauthorized charges that the exchange has vowed to reverse.
Featured image from Shutterstock.