Coinbase Hit With Class Action Over Unclaimed Cryptocurrency
The lawsuit filed March 2 marks the second time in as many days that the company has been hit with a class action in the Northern District of California.
March 05, 2018 at 06:19 PM
2 minute read
Coinbase has been hit with a proposed class action lawsuit claiming the San Francisco-based digital currency exchange has unlawfully held onto some unclaimed cryptocurrency that account holders have routed to others' email addresses.
The lawsuit, filed March 2 in the U.S. District Court for the Northern District of California by San Diego lawyer William Restis, claims that Coinbase, which allows its account holders to send cryptocurrencies to a recipient's email address, has violated California's Unclaimed Property Law by failing to deliver cryptocurrencies to some people who didn't already have Coinbase accounts.
“Imagine writing a cashier's check to a friend,” wrote Restis, in the introduction of the 13-page complaint. “The bank withdraws funds from your account, but your friend never cashes the check. Does the bank get to keep the funds? The law clearly says no. But this is exactly what has happened with cryptocurrencies sent through Coinbase.com, owned and operated by Coinbase Inc.”
The name plaintiffs in the lawsuit, Timothy Faasse and Jeffrey Hansen, claim that they were sent 0.1 and 0.01 bitcoin respectively via Coinbase to their email addresses in 2013. According to the complaint, the two men were reminded about the transfers in February of this year, but when they tracked down the old emails from Coinbase, the links provided within them were broken. Restis estimates in the complaint that there are “thousands” of people in the same position as the name plaintiffs and seeks to certify a class of anyone who was sent cryptocurrency by email via Coinbase who never claimed it.
The suit claims that Coinbase has failed to provide the required notice to the plaintiffs under California's Unclaimed Property Law, which requires financial services companies to alert owners of unclaimed property between two- and two-and-a-half years after a transfer of property. The lawsuit also brings a claim under California's Unfair Competition Law and a common law claim of conversion.
The unclaimed property suit landed just a day after Coinbase was hit with a separate proposed class action alleging that Coinbase employees and others made big gains by trading on insider information that the company would support transactions in Bitcoin Cash, a bitcoin offshoot.
Coinbase representatives didn't immediately respond to an email seeking comment on the new suit.
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