Coinbase may face class action lawsuit from customers over BCC

Bitcoin has successfully hard forked to create another new coin – Bitcoin Cash (BCC). After the fork yesterday, Bitcoin holders who controlled their private keys received the corresponding amount of BCC. However, investors who stored their BTC on exchanges left the decision to the exchanges. This has led to tensions between Coinbase and its customers, who are now angrily demanding that the exchange allocate BCC to them.

Before yesterday’s fork, several exchanges publicly stated that they would not support BCC, and Coinbase was one of them. Before the fork, the exchange provided a FAQ page that stated:

“Coinbase will not support the Bitcoin Cash blockchain and its digital currency. Any Coinbase Bitcoin customer’s account will still only have access to the Bitcoin main chain. If you want to own both BTC and Bitcoin Cash, please withdraw your BTC from the platform before July 31st.”

After the blockchain split occurs, customers who transfer their BTC funds from Coinbase before the deadline and keep their private keys will receive a 1:1 amount of BCC tokens.

Coinbase customers may launch class-action lawsuit against Coinbase

Although Coinbase has stated in advance that it will not support BCC, its customers still believe that they are entitled to BCC. Many customers expressed anger and accusations on the Coinbase forum.

Tim Wu, a legal scholar, pointed out that Coinbase may face serious legal problems if it does not hand over BCC. He mentioned, "In my opinion, @coinbase has encountered serious problems. If they do not give customers all the forked coins, this may cause catastrophic legal disputes." He also analyzed the situation where economic companies do not distribute stock splits to customers.

Wu believes that even Coinbase’s terms of service can’t save them, and he suggests that Coinbase has an obligation to do the right thing and hand over the BCC.

Imagine that the broker of a stock split refuses to distribute the newly issued shares to their owners, which is the position @coincase is in now.

Coinbase Customer Legal Portal

There is even a website set up for Coinbase customers to sue Coinbase over BCC. The website states:

“Our ultimate goal is to reach a settlement with Coinbase, help them understand the concerns of the user community, and allow them to take correct and appropriate actions to allow users to trade or withdraw BCC tokens generated after the August 1st fork. However, Coinbase needs to understand that if the company chooses to continue to withhold BCC tokens, causing tangible and significant financial losses to customers, the community is prepared and will take necessary legal action.”

There is no doubt that Coinbase will face significant pressure, and it may even escalate into a cumbersome and expensive legal matter.

Coinbase may succumb to pressure

Of course, Coinbase may succumb to pressure, which has happened before. Last year, Ethereum split due to The Dao incident, resulting in the birth of ETC. Although it took some time, Coinbase finally decided to distribute ETC funds to its customers. A similar situation may occur, and Coinbase may eventually distribute BCC to its customers. As of now, Coinbase has not commented on this issue.