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His complaint meets neither of those terms of service.

Coinbase confirmed the banking side of things, and then failed to deliver the coins. As a result, the investor is taking a material loss solely due to Bitcoin's failure to deliver. You can't TOS a failure to deliver out of the equation.

At the least, he should be entitled either to cash or Bitcoin credit for the difference in value between the delivery date and the actual delivery date.

> As a result, the investor is taking a material loss solely due to Bitcoin's failure to deliver.

They are very careful not to use the word "invest" or "investment" or even remotely suggest that BTC is an investment. They merely discuss buying and selling BTC. This is akin to a marketplace for buying and selling Magic the Gathering cards. An MtG exchange doesn't treat the Wrath of God cards as an investment; in the same way, Coinbase doesn't treat BTC as an investment.

He's taking a material loss regardless of whether he bought them as an investment or just to buy stuff with Bitcoins.

In a court case, the breach of contract will be evaluated and the losses incurred will be relevant whether or not the assets are an "investment". What kind of law will apply is up for debate.

> breach of contract

What breach of contract? Coinbase didn't agree to deliver by a specified date. I will emphasize the key phrase:

> Coinbase makes no representations or warranties regarding the amount of time needed to complete processing

There's a reason these CYA clauses exist. And the time frame (8 business days) isn't entirely unreasonable (in the sense that banks generally give themselves 3 days for ACH, with an additional 7 business day holding period if necessary).

Downvoter: if there is some other contract that I am unaware of, please reply with a quote or link

No, that doesn't work. There's a difference between fine print qualifying statements, and fine print explicitly contradicting statements.

Your system can't say "Bitcoin deposit, 13 December", whilst your TOC says "eh, can be whenever we want".

So this counts as a dispute with Coinbase, and the terms for that are pretty clear:

> 5.3 Disputes with Coinbase. If you think we have made an error, write to us at 14525 SW Millikan Way #26680 Beaverton OR, 97005, or email us at support at coinbase.com. In your correspondence, you must give us information sufficient to identify you, your account, and the transaction on which you believe an error occurred. You must contact us within 30 days after the transaction occurred. Within 90 days of receiving your request, we must either correct the error or explain to you why we believe the transaction was correct.

The key phrase here is "Within 90 days of receiving your request, we must either correct the error or explain to you why we believe the transaction was correct." Notification must have happened after December 8, but let's say December 8. That means, at the very least, they have until March 8 to give an explanation.

BTW: I agree that making the customer whole is the right thing to do, but strictly speaking they have time to respond.

More generally, on the issue of online displays, I checked my bank's terms of use (http://www.tdbank.com/exc/pdf/internet_banking_agreement.pdf) and it clearly says:

> We agree to make reasonable efforts to ensure the full performance of the Bank’s Online Banking Service.

> We are not responsible for any indirect, special, incidental or consequential damages arising in any way out of your use of the Bank’s Online Banking Service.

They indemnify themselves against issues with the online display.

Certainly, to be exact, his decision to 'invest' is entirely separate from the functionality offered by Coinbase, et al. Duly noted, but if you can demonstrate a material loss due to the failure to deliver of another party, it would be hard to argue you don't have a civil case for losses / damages.

Good analogy; you're also referencing how the MtGox domain started out as a Magic the Gathering exchange, right?

Fuck their shitty TOS, call the SEC and have them investigate, they need to comply with the law.

They are acting as financial services provider and must be in compliance with those laws.

The law gives the OP a clear resolution.

There's a pretty clear resolution here, give the customer back their money because your business doesn't actually work, or give the customer the coins at the most favorable price.

BTC exchanges aren't regulated in the same way as stock exchanges. Coinbase isn't a BD AFAICT, so they don't have the same type of fiduciary responsibilities. They also aren't registered as a bank or as a NY private bank, so they aren't subject to FDIC or other banking regulations.

They are much closer to ebay than to IB

If you get it in front of a judge miraculous things can happen, if a judge finds as a matter of fact that they are an exchange than suddenly their more like IB than eBay. By guaranteeing a price they are acting as a counterparty to the transaction.

That's the whole point of this, CoinBase doesn't want to be like IB so they should refund the customer his money rather than acting like a fraudulent IB.

There are plenty of more serious operations like http://bitcoincapitalpartners.com that take client money seriously.

In the recent senate hearing around Bitcoin everyone agreed that the current laws can and do apply to Bitcoin. Some modification is needed, but not much.

At the end of the day, it's up to the judge.

Which law? I can see something under non delivery of goods paid for but that would just be a civil court matter. If you order a car at your local dealership and then they don't give it to you, that's not something the SEC cares about.

http://www.bankersonline.com/regs/210/210.html http://www.law.cornell.edu/ucc/4A

Please explain to a judge how something called 'bitcoin' is more like a car than cash. If it was called bitcar and people were could redeem their bitcars for a ride then you might have a point.

How is it more like cash than a commodity? I can't directly take bitcoins or gold or copper and purchase anything at my local wal-mart. Since the car analogy didn't work for you, lets say I contract someone to buy 1 oz of gold/platinum/etc at a specific price. They don't deliver, are they falling afoul of funds transfer laws or is it a contract dispute?

> I can't directly take bitcoins or gold or copper and purchase anything at my local wal-mart.

You can't do that with Euros, either (assuming you're in the US, otherwise s/Euros/USD/). But that's obviously closer to cash than commodity.

There are merchants that accept bitcoins in return for goods. You're just purposefully avoiding them in your argument.

There are merchants that accept gold in return for goods too, but we don't consider all gold transactions to be money transfers do we?

My point was not that bitcoin is a currency. I happen to believe that, but I didn't argue that. My argument was that the definition you were using in order to show that bitcoin isn't a currency was flawed.

http://en.wikipedia.org/wiki/Bitcoin

It seems that the overwhelming popular opinion is that it's a digital currency.

According to Coinbase: Bitcoin, safe and easy. Coinbase is an international digital wallet that allows you to securely buy, use, and accept bitcoin currency

So pretty much everyone agrees that bitcoin is a digital currency.

FinCEN, one of the US agencies charged with regulating financial institutions, considers Bitcoin to be a "virtual currency" and thus institutions dealing in Bitcoin are subject to some, but not all, of the regulations applying to normal currencies.

So you're right, it's not a matter for the SEC, but it definitely is a matter of concern for several other federal agencies, all of which have more teeth than the SEC.

The original poster does seem to have started small(er) before scaling up: https://news.ycombinator.com/item?id=6929954 .

It's a TOS. Feel free to write whatever you want in there, because much of it will go straight to the trash if its ever tested in front of a court.

If they were holding onto 35.10 rather than 35.10K, I suspect you would react differently

The courts tend to as well.

Actually you'd be wrong in this case as it is an illegal practice ("bucketing") whether due to a technical error, human error or malicious intent.

The settlement amount may defer for the plaintiff, but the as it would be considered as/or similar to securities fraud the repercussions for the company could be dire.

What is "bucketing"? Isn't this a simple case of goods paid for but not received? This is the same as if I buy 100 gallons of fuel oil for $5 and they don't deliver it.

No it isn't, because holding the assets is causing a depreciation in value for him.

So if I buy 100 gallons of fuel oil at $5/gallon, someone fails to deliver it to me on time and the price drops to $2/gallon, that's "bucketing"?

No...Bucketing would be you buying 100gal of fuel through a broker for $5/gal and your broker in turn not buying your fuel until the price drops to, say, $4/gal. Thus they get to keep the $100 difference + their normal fees.

Not saying this applies here, but assuming goods sold are delivered on time, does it matter what price and when they were purchased for sale?

I can understand it not being legal in the case of brokerages that submit orders to an exchange but if I buy fuel (or sell a futures contract to buy fuel) the other end of that doesn't have to have the fuel at the time of agreeing to the contract, just when its delivered right? It transfers the price risk to the counter party which seems to be legal and how (to continue the example) most home heating oil companies work.

I see where you are coming from here, and I will try and answer to the best of my abilities. There are multiple scenarios that you have opened to discussion each deals with different regulatory frameworks and the laws and scope change accordingly. Frankly any industry that comes under the purview of self-regulatory organizations and special regulatory bodies have a easier time contesting wrong doing.

As this can get very lengthy I will just point you to the right resources where good information is available.

In terms of futures it is correct that the other party does not need to possess the underlying commodity. In the US commodity futures and options trading comes under Commodity Futures Trading Commission[0]. With futures contracts institutions that you would initiate the trade through are required to maintain strict margins this is usually the case for speculators and small hedging operations. Most if not all trading platforms I have come across automatically close/roll-over the futures contract, thus delivery does not usually become a problem. If delivery does arise, the definition of delivery is not the traditional definition, you can read more about it at [1],[2] and [3].

In terms of a small purchase of physical crude oil from a middle man with upfront cash it comes down to the paperwork and the terms that were agreed to. For example if you were given a delivery date of 5th December with a guaranteed latest by 10th, and they failed to deliver you'll be able to take them to court if you feel the losses and hardship suffered due to the delay justifies the lawyer and court fees you would incur.

In terms of a large shipment of crude (may also apply to a small purchase, but would be more trouble than necessary), the money is rarely given upfront but is usually on the basis of Letter of Credit(LC) issued by a financial institution that works similar to an Escrow, with the performance terms built-in. So in case of failure to deliver, damage etc. the monies released conform to the terms of the agreement. There is a ton of information available about how LCs work, start of with the wikipedia page [4], it would also help to learn how delivery works in international trade(Incoterms) [5].

[0] http://www.cftc.gov/index.htm

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Futures

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[1] http://futures.tradingcharts.com/tafm/tafm10.html

[2] http://investdaily.custhelp.com/app/answers/detail/a_id/450

[3] http://www.investopedia.com/terms/f/failuretodeliver.asp

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International Trade

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[4] http://en.wikipedia.org/wiki/Letter_of_credit

[5] http://en.wikipedia.org/wiki/Incoterms

I guess the value fell to zero. :)