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Comment by gnaritas | Hacker News Reader

> Nothing

False. Theft is against the law. Bitcoins don't magically avoid being subject to existing law. The owners are known and subject to US jurisdiction, you have legal recourse through the courts should they try and steal your funds.

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The law doesn't prevent you from committing crimes. It certainly did not prevent Mt. Gox from making bitcoins disappear.

If that happens and you need to go to court, good luck proving that an exchange stole your coins. We haven't even seen Mt. Gox play out yet. Suppose they actually stole everyone's coins. Can someone prove it wasn't a hacker or a software bug? Time will tell.

The one good thing about coinbase is that they do react to outrage on HN. For example: https://news.ycombinator.com/item?id=6929705

The fact that public outrage is required to get their attention when dealing with such large amounts of money doesn't inspire confidence. Your example is a good example of bad customer service, not something good to credit them with.

> The law doesn't prevent you from committing crimes.

That wasn't the question, the question was what's to stop them and the answer I objected to was "Nothing"; that's false, the law is not nothing. What's to stop most bad behavior... the law.

The law is fairly obviously not an answer though, given the context. The original question specifically asked what stops Coinbase from shutting down and taking everyone's money like MtGox did. It was just as illegal when MtGox did it, yet it happened anyway. (Actually, most of the other answers have the exact same problem.)

> The law is fairly obviously not an answer though, given the context.

You're free to think that, I'm free to think you're wrong. MtGox is in Japan, Coinbase isn't; the contexts are different.

If there is evidence that MtGox was complicit in the loss of their customers' Bitcoin, someone will go to jail, regardless of the jurisdiction. It's plain old theft.

>>What's to stop most bad behavior... the law

No... what stops most bad behavior is _consequences_. The law applies to everyone, but the consequences for breaking them don't.

We will see what(if any) consequences are placed upon MtGox. Personally, I still can't see how MtGox will be found liable of anything. Bitcoins aren't protected under any law and nobody said it was okay to trade your hard-earned government-backed fiat for some magical interwebz money. It might as well be fairy wings & unicorn tails. Don't get me wrong, I'm into crypto-coins and willing to lose up to 7k on them... but I fully understand that my coins could disappear in the next 5 mins due to any number of reasons and I have absolutely nobody to blame but myself.

The law is what defines the consequences, your pedantry is pointless.

> Bitcoins aren't protected under any law

False. Just because something is new doesn't mean existing laws don't apply to it. Bitcoins are property and property is protected by law regardless of when said item was invented. We don't have to create new law to cover every new invention man decides to own.

I disagree with you... but we'll see how it plays out with MtGox.

In the eyes of the law, I don't think bitcoin is your property anymore than buying a special weapon on Eve Online with fiat-money is your legal property. Maybe it should be, maybe it will be, but today that's not the case.

Or maybe I'm completely wrong... Has anyone sought legal action on financial loss related the value of an item inside Eve Online? Or any virtual item in any system?

A straight scam I understand, but say you purchased a bunch of rare swords & armor in some online game then next month the server crashes and all players lose their virtual items and the gaming company goes bankrupt. Is the company liable?

Lots of people in this thread seem to think that there is either no incentive for Coinbase to conduct their business legitimately, or that the law is the only incentive. That ignores the much more obvious and presumably stronger incentive: they should be able to make a lot more money as a legitimate business than if they just ran away with one lump sum.

That relies on the assumption that they will not suffer a tremendous loss due to a rogue employee, a software bug or a malicious hack.

If they found themselves in a situation in which they are certain to go out of business as soon as people find out that they are in trouble, that motivation would cease to exist. It would come down to ethics, reputation, pressure from investors, etc.

Sure, Bad Things™ could happen at Coinbase like they did at Gox. However, I think it is reasonable to trust Coinbase more than Mt. Gox. If you looking to Mt. Gox's history there are many signals that suggest general mismanagement and dysfunction.

This is in no way rigorous but consider User Interface design as a rule of thumb. Gox had an ugly unintuitive site. Coinbase on the other hand has a polished UI. This attention to detail suggests that the people who operate Coinbase are very different from those who operated Gox.

Rogue employees, software bugs, and malicious hacks can also happen in a pure USD business covered by explicit laws.

The mistrust in Coinbase line of thinking seems similar to fear and paranoia about terrorism. Could a bad actor acquire and use agency to do something horrible like obtain a dirty bomb and set it off? Sure, it is possible. But at the same time it is very unlikely. People GENERALLY want to be good actors and make a positive impact on the world.

With Mt. Gox I am more inclined to think their problems stemmed incompetence rather than malevolence.

> The owners are known and subject to US jurisdiction

Assuming they don't just leave the country

... Most places have extradition treaties with the US or US-allies. I'm sure it wouldn't be hard to find one Coinbase user not in the US, then use that country's extradition.

We have jurisdiction in all countries, just ask our politicians and witness our world policing.

How do you probe you lost something that is not tied to your identity ?

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