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It's an interesting situation, but assigning liability to coinbase for this seems like it'd be a problem long term. Unlike traditional securities, there's nothi

• btzll 9y ago
  This is not a random fork. This is a fork with almost $400 million 24 hour volume. Coinbase should allow users to withdraw their BCC, since they are sitting on a huge pile of BCC units, which belong to customers.
  • abhi3 9y ago
    And if the price of BCC were to crash to single digit USD in a week it takes for Coinbase to come to a decision then the customers would have lost a fortune.
    • Alex3917 9y ago
      They already came to a decision. They told people who wanted BCC to withdraw their coins before August 1st. Everyone who wanted BCC already has them.
      • lawn 9y ago
        ... Giving a few days to do it. Ignoring withdrawal limits the customers cannot raise.
        • Alex3917 9y ago
          Customers could have sold their BTC for USD at any time and just held USD until after the fork. There isn't any functional difference between holding USD pre-fork or holding both BTC and BCH post-fork.
          • cosarara97 9y ago
            That's wrong. If I hold 1 BTC, I'll have 1 BTC and 1 BCH after the fork. If I sell for the equivalent of 1 BTC in USD (say, $2500), I'll have $2500 after the fork, instead of $2500+$700 (price of 1 BTC + price of 1 BCH)
      • vocatus_gate 9y ago
        I think an argument against that is that 10 days is a pretty short deadline to act to prevent a potentially large financial loss. Especially if you were on vacation, not following the news about bitcoin, etc. Coinbase doesn't have to support trading BCC, they can simply provide a withdrawal function so people can claim their BCC and move on with their lives. Their decision to ignore it entirely is going to get them sued and it's going to cost them.
        • undersuit 9y ago
          Does the stock market offer do-overs if there is a significant move against you while you're on vacation? Would Coinbase normally be held accountable for a significant move in Bitcoin against you while you're on vacation? Coinbase isn't a company to secure your Bitcoins against the value of the dollar, it's a company that stores Bitcoins and facilitates transactions.
          • vocatus_gate 9y ago
            No, what I'm saying is by refusing to allow withdrawal of the "new" coins, they put themselves in the position to be sued because clients lose potentially a lot of free money. It's an opportunity cost: if I missed out on some big trades while the price was high due to their decision to withhold the keys, I'm rightfully annoyed by it. Of course leaving legality out of it, it'd also just be a smart thing to do because it makes their customers happy and maintains goodwill. Coinbase is fairly respected in the crypto space and making their customers happy during a turbulent period can only be good for them in the long run. They will capitulate eventually. Same thing happened with ETH/ETC.
            • AgentME 9y ago
              > No, what I'm saying is by refusing to allow withdrawal of the "new" coins, they put themselves in the position to be sued because clients lose potentially a lot of free money. Coinbase is a company that handles people's Bitcoin (and a couple other currencies). Coinbase never made any promises to support other currencies that copy Bitcoin's balances or are otherwise awarded to Bitcoin users. Bitcoin Cash isn't mentioned or promised in any of Coinbase's advertising materials. Handling of Bitcoin Cash is a service that Coinbase has never claimed to offer.
      • dsacco 9y ago
        That doesn't resemble anything like the business practices of mature exchanges. The best analogy I can think of offhand is a stock split or (more frequently) a dividend. An exchange could not in any universe give its customers 10 days to withdraw its funds or agree to forfeiture. You don't just get to take customer assets because you sent out an email and gave them 10 days. This is why we have the concept of consideration in the first place.
        • scott00 9y ago
          There are actually some somewhat analogous situations in the US listed equity options markets. Options are typically adjusted for corporate actions other than regular dividends. However, special dividends are only adjusted for if they are more than 12.5 cents per share. And for voluntary corporate actions the options are adjusted according to whatever would happen to a non-electing shareholder. So if there's an exchange or tender offer, or a merger with electable form of payment, you have to exercise your options ahead of the ex date in order to benefit.
          • dsacco 9y ago
            I think that's a really good point, but I'm still going to contest it. Options are derivatives, so they're different from cryptocurrencies, which are themselves analogous to equities. An option inherently has a date of expiration, whereas a cryptocurrency (even a fork) does not intrinsically have such a thing, and with an option you do not own the underlying unless you choose to exercise.
  • chrisabrams 9y ago
    It took me maybe 15-20 seconds to "claim" my BCH from BTC. I don't think its a technical issue here, so not sure why Coinbase would create such a negative situation. Simply provide an input to paste a withdraw wallet address for BCH and everyone can move on. Even if BCH had only been worth $0.10 people would still want to claim their free money.
    • maxerickson 9y ago
      I bet it comes down to not wanting to go through the same thing for every fork that gains a little bit of momentum. If their accounting is competent they can anyway trivially award the correct amount of BCH at any later date (because they'd be able to determine exactly how many BTC each customer had at any given moment). That's not nice for customers that want to trade now, but people are hardly forever screwed if BCH becomes the new thing.
  • makomk 9y ago
    Even the exchanges that trading is occuring on aren't necessarily allowing users to withdraw their BCC/BCH yet. Kraken say deposits and withdrawals may not be available for several days: https://twitter.com/krakenfx/status/892689436109971456 https://twitter.com/krakenfx/status/892689436109971456 Not sure about ViaBTC and Bittrex.
  • fauigerzigerk 9y ago
    There's something I don't quite get (being a cryptocurrency newbie). Why can coinbase users not simply import their private key into some other wallet that supports both Bitcoin and Bitcoin Cash? My understanding is that Bitcoin Cash recognises the old Bitcoin blockchain as their own up to the point of the fork. So as of Aug 1st all Bitcoin balances are Bitcoin Cash balances as well. Or is that not how it works?
    • mikeash 9y ago
      Coinbase users don't have a private key for their Coinbase balance. They have an account with Coinbase, and Coinbase has their own private keys for their internal wallets. When you withdraw money from Coinbase, you're asking them to use their private keys to sign a transaction sending bitcoins to an address you specify. What users could have done was withdraw their Coinbase balance into their own wallet, then they'd have coins on both forks. This had to be done before the fork happened, though. Now that it has, anyone whose coins were in Coinbase at the time of the fork is at the mercy of Coinbase.
      • fauigerzigerk 9y ago
        Oh, I see. That's unfortunate. Thanks for explaining.
      • encoderer 9y ago
        Worth mentioning that they notified users before the fork.
      • chii 9y ago
        Users of coinbase have no real right to complain because they have given up their control of their bit coin when they sign up for coin base. Unless this wasn't made clear by coin base at the beginning, i don't see how the law suit has any legs.
        • mikeash 9y ago
          They're giving up control of their bitcoin for specific purposes. Coinbase can't just do whatever they feel like with it, any more than your bank can one day just declare "Hey, we decided to keep all of your deposits, FOAD, thanks."
• alekratz 9y ago
  Yeah, that's how I feel about this. It's not coinbase's responsibility to act as a host to all cryptocurrencies. The article states, > An activist group, which claims Coinbase's decision is akin to a brokerage withholding new shares from its investors, ... which is not at all what it's like. Coinbase isn't the only source to buy/sell BCC. I think it's ridiculous that a company could be sued because they don't offer a new service.
  • holtalanm 9y ago
    That is not the issue at all. The issue is that Coinbase is _withholding_ the BCC from its customers. Technically, Coinbase has been awarded the BCC for all of the wallets they are in control of, but are refusing to distribute it. It really is akin to a brokerage refusing to award shares to customers due to a company split/stock split.
    • bdamm 9y ago
      It seems clear that Coinbase must have a major fundamental financial problem.
      • ghostbrainalpha 9y ago
        How does that follow?
        • bdamm 9y ago
          If Coinbase is actually holding BTC for every claimed BTC of their customers, then it's trivial to calculate how many BCH the customer held at the time of the fork and create a way to claim them or transfer them. It could be a one-time option, if Coinbase doesn't want to deal with BCH. Unless they aren't holding as much BTC as their customers think they are. In which case, it gets complicated.
    • badloginagain 9y ago
      They clearly stated, well in advance, through multiple channels, their intention not to support BCC. They specifically told people to take their BTC off CoinBase if they wanted BCC. I don't think they could have been any clearer.
• chrisabrams 9y ago
  It's a good way of looking at it. Another perspective, which makes this issue so complicated, is that we could compare this to: a company on the stock exchange splitting into two companies, investors should be getting shares in both companies, but the brokerage decides they are not going to recognize the second company and thus the investors don't get their shares in the second company.
  • throwaway2016a 9y ago
    In practice that's often not how that works, though. I had a company I have shares in that split in two and they gave me a choice, either convert my shares to the new company or keep them in the existing company. I didn't automatically get shares in the new company and if I opted too I would have lost the shares in the original company.
    • abduhl 9y ago
      What company was this? I have literally never heard of a spin off that did not result in a stockholder getting ownership of the parent and spin off, or the stockholder retaining ownership of one company and being paid out for the value of their ownership in the other company. Was this a publicly traded company?
      • kgwgk 9y ago
        It's not the most usual mechanism, but it exists: http://www.spinoffresearch.com/spin-off-mechanics/split-offs http://www.spinoffresearch.com/spin-off-mechanics/split-offs Edit: usually (always?) the exchange is preceded by a partial IPO (or a stake in a quoted company exists for some reason) and they are distributing the remaining shares.
      • throwaway2016a 9y ago
        Pfizer, although I only owned a few shares so I didn't follow up. Doing some quick searches it seems the spin-off might have been halted.
  • runeks 9y ago
• lawn 9y ago
  As others have said, it really depends on the value of the fork. If you make a fork worth nothing, nobody's going to care. But as right now Bitcoin Cash is worth $634 and regular Bitcoin $2727 per coin according to coinmarketcap.com. That's 23% the customers are loosing out on instantly. And the defense that the users should be responsible to withdraw your coins if you want to keep it on both forks is disingenuous. There are withdrawal limits and requests for raising the limit goes unanswered for months due to high demand. Those users have literally no course of action. Also Coinbase issued their stance on Bitcoin Cash 10 days before the fork, this doesn't leave much leeway for customers on vacation for example.
  • Cthulhu_ 9y ago
    But there's other cryptocurrencies with a nontrivial market cap out there; Coinbase only supports three. Then there's fiat currency, of which Coinbase's support is also limited. Again, where do they draw the line?
    • lawn 9y ago
      It's irrelevant if Coinbase supports trading of the coin. What they should do is allow the customers to withdraw their Bitcoin Cash coins. What other cryptocurrencies have been forked of another coin gaining such a large value, placing the exchanges in the same spot? I can think of only one: Ethereum and Ethereum Classic. The same thing happened there. Coinbase was forced to allow the customers to withdraw their Ethereum Classic coins. > Again, where do they draw the line? If a forking chain survives and gains a significant share they should allow withdrawal of their coins. Not keep them, as they are doing now.
      • yebyen 9y ago
        The fork has literally existed for 36 hours only. It is easily too soon to say whether it will survive. You may have read or done technical analysis that came back supporting the conclusion that it will survive, but if Coinbase is taking the position that it won't survive, IMHO it is much too soon to say whether or not the same thing is happening here. As a matter of fact, this can't be the same thing... Ethereum Classic was the original chain. Ethereum(') is what the developers answered with, after the famed failure of the DAO, before 28 days had passed and the damage would become irreversible. If anything, your comparison is reversed, but in my opinion it is nowhere near close to the same thing. Eth Classic tokens are called classic because it was the original chain (with the bug in it, "just like we agreed to," if I understood the story fully.)
• Cthulhu_ 9y ago
  There was a hint that customers should withdraw their BTC from Coinbase before the split and (if they want to) move it back afterwards; the people that are suing knew this, and knew that Coinbase wasn't going to support it (at first), and yet kept their BTC hosted in Coinbase's wallets.
  • Expez 9y ago
    With withdrawal limits being what they are, this is easier said than done for a lot of users, I'd guess.
    • undersuit 9y ago
      Was their any actual limit to moving Bitcoins held in Coinbase to another wallet/software? If there are why is it a problem now and not always?
      • vocatus_gate 9y ago
        Yes, Coinbase limits BTC withdrawals based on current USD value. A lot of traders lost money because they couldn't get their funds out in time. Coinbase will likely get sued and it'll cost them.
        • undersuit 9y ago
          No not witdrawals. Is there a Coinbase imposed limit to how many Bitcoins I can send to another wallet? And was that recently implemented? Coinbase certainly has conversion limits, but anyone that wanted their Bitcoin into Dollars knew about this limit far before the warning of Coinbase only supporting one side of the split, and converting into Dollars means you don't want to risk the split and you should have been diversifying far before Coinbases announcement.
          • vocatus_gate 9y ago
            >Is there a Coinbase imposed limit to how many Bitcoins I can send to another wallet? "Sending to another wallet" IS a withdrawal.
• mikeash 9y ago
  I imagine the line gets drawn at a certain value. If Bitcoin Cash were trading at two cents a coin, this wouldn't be happening. Your fork would probably be at that end of things.
  • MichaelGG 9y ago
    Exactly. Coinbase should have learned from Ethereum Classic and just announced a general policy. If a fork ends up with a certain volume and certain % of the original over a certain amount of time (to avoid someone inflating the stats temporarily), then Coinbase will support at least withdrawals. They can cap it to a month/year/whatever after the fork so it's not an indefinite issue they need to deal with. By doing that, uncertainty is eliminated, people can keep their coins on Coinbase knowing if they're worth anything serious, then they'll be fine. Zero downside.
• colordrops 9y ago
  As I mentioned in another comment, no lines would need to be drawn if they didn't advertise themselves as holding your wallet/coins/private keys. If their website and marketing copy were direct about the truth, which is that you are a holder of an IOU for a particular chain, then there would be no problems. it's a common refrain that you don't actually own your coins if you are not the sole holder of the private keys, and this is one example as to why.
  • AgentME 9y ago
    Coinbase doesn't advertise itself as a service for Bitcoin Cash or having anything to do with it. They've never promised it, said it in marketing materials, etc.
    • colordrops 9y ago
      You totally ignored my point. I said nothing about Bitcoin Cash.
• mrfusion 9y ago
  How about draw the line at a dollar value. Say ten dollars per coin. It's actually a pretty simple issue to solve.
  • verbatim 9y ago
    How do you determine the dollar value if there aren't solid exchanges where people are buying and selling the coin?
• ringaroundthetx 9y ago
  Over the past month there have been several airdrops to bitcoin holders based on snapshots of bitcoin's blockchain. Stellar Lumens had an airdrop Byteball had an airdrop and there are many more, let alone bitcoin forks. These are all very valuable for holders, and people that own their private key. There are several problems for exchanges, and it doesn't make sense for them to bake that kind of functionality in until a legal framework forces them too. In which case, yes the customer SHOULD sue, thats the only way to progress this. But the old adage is that if you don't control your private keys you don't have any control. And unless the exchanges start providing access to these airdrops as if they are dividends for holding, then it will be a very complex issue for them.