Thoughts tagged "law"

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Given the recent data breach and Coinbase’s user agreement that aims to force customers into arbitration rather than individual or class action lawsuits, it’s interesting to read the outcome of a recent arbitration case against Coinbase.

1. FACTUAL BACKGROUND 4. On January 5, 2024, Mr. Spilker filed a Demand for Arbitration with the American Arbitration Association (“AAA”) against Coinbase, Inc. seeking damages in the amount of $350,000 for withdrawal of staked cryptocurrency, allegedly without his authorization. Ex. A at 2. He alleged that he had been in contact with a “Coinbase Agent” and brought causes of action under the Electronic Funds Transfer Act, tort and common law, breach of contract, California law, Oregon and Idaho law, and federal commodities and securities laws. Ex. A at 2-3; Ex. B. 5. The User Agreement between Mr. Spilker and Coinbase, Inc. provided that the parties agreed to arbitrate any disputes, and that the arbitration would be “in accordance with the American Arbitration Association’s rules for consumer related disputes.” A true and correct copy of the User Agreement is attached hereto as Exhibit C. See Ex. C at § 7.2 (the parties’ agreement to arbitrate and agreement that an award may be enforced). 6. Arbitrator Diana Kruze was appointed as the neutral to decide this dispute. Mr. Spilker did not object at any time during the pendency of the arbitration to the selection of Arbitrator Kruze. 7. Coinbase filed a Motion for Summary Judgment on all Mr. Spilker’s claims. Briefing was completed on December 9, 2024. Ex. A at 1. 8. A hearing on the Motion for Summary Judgment was held on December 16, 2024. Id
9. On December 17, 2024, Arbitrator Kruze issued an Order Granting Dispositive Motion as to all of Mr. Spilker’s claims. Ex. A at 6 (“Respondent’s Motion for Summary Judgment is GRANTED. Claimant’s claims against Coinbase are dismissed.”). 10. The Final Award holds: a. Claimant’s EFTA cause of action is time-barred because the “one-year limitations period begins when the first unauthorized transfer occurs, not upon discovery by the consumer, and not when the consumer notifies the defendant of the unauthorized transfer.” Id. at 3, applying 15 U.S.C. §1693m(g) and Wike v. Vertrue, Inc., 566 F.3d 590,593 (6th Cir. 2009). b. “The undisputed facts show that a third party, not Coinbase, caused Claimant’s damages” and that “Claimant’s damages were the result of an intervening and superseding cause: the actions of a third-party scammer. Coinbase, as a matter of law, cannot be held liable for Claimant’s damages.” Ex. A at 4, citing May v. Google, LLC, No. 24-CV-01314- BLF, 2024 WL 4681604, at *10 (N.D. Cal. Nov. 4, 2024). c. The parties’ contract forecloses Mr. Spilker’s causes of action for breach of contract, negligence and tort claims, and claims under Idaho and Oregon law. Ex. A at 5. d. Pursuant to Melchoir v. New Line Prods., Inc., 106 Cal. App. 4th 779, 793 (2003), “Claimant’s cause of action for unjust enrichment fails because ‘there is no [such thing as a] cause of action in California for unjust enrichment.’” Ex. A at 5. e. Mr. Spilker’s CLRA claim fails “as courts have consistently held that the CLRA does not apply to cryptocurrency exchanges like Coinbase”. Id. at 6, citing various cases.

Customer lost $350,000 in September 2022 to a phishing attack from a scammer that the customer said had “confidential information that could have only been obtained with direct access to Coinbase’s database”.

14. Mr. Spilker took many protective measures to keep his account safe. He proactively took steps to secure his account with multifactor authentication safeguards and even purchased and used Yubikey, a hardware authentication device that is supposed to prevent phishing thefts. 15. Mr. Spilker also took adequate steps to protect his account information. He did not share his private keys or password with any third parties.
42. The thief called Spilker on his cell phone and claimed to be an agent calling on behalf Coinbase to report a security breach. Mr. Spilker was suspicious so requested confirmation that the caller was truly a Coinbase representative. 43. The thief responded by reciting confidential information that could have only been obtained with direct access to Coinbase’s database. 44. Specifically, the thief recited Spilker’s transaction history to him as well as certain account specifications that should have only been known to Coinbase. 45. The thief reported that there was a compromise to his account and stated that Coinbase would convert his Ethereum coins to cbETH in order to protect them.

Coinbase didn’t prevent the suspicious transfers, allegedly wiped customer’s transaction history, blamed the customer for the loss, then refused to reimburse. Arbitration concluded with $0 reimbursement.

56. To add insult to injury, Coinbase wiped clean the transaction history on his account. This was either reckless destruction or a deliberate tactic to keep Spilker from discovering the full extent of his losses. Case 3:25-cv-02573-LB Document 1 Filed 03/14/25 Page 26 of 134 13 57. Perhaps even more damaging is that it left Mr. Spilker without the requisite documentation to accurately file his taxes. 58. Coinbase went to great lengths to cover up its fraud. Coinbase dismissed his concerns, suggesting that he was conflating the cbETH launch (which permitted unwrapping) with the actual merge (which would permit unstaking). 59. Following a demand for repayment, Coinbase informed Mr. Spilker on February 14, 2023 that it would not reimburse his account, and blamed Spilker for supposedly taking inadequate safety measures.
Coinbase’s Failures to Take Reasonable Care 61. Coinbase should have prevented these unauthorized transactions based solely on the unusual timing of the consumer having his credentials changed, a demand from Mr. Spilker to lock his account, the previously unused wallet where the funds were sent and the unstaking of assets that were supposedly immobilized. 62. Other cryptocurrency exchanges do not allow these same criminal transfers because those exchanges use standard security measures which include freezing an account when certain actions – such as password changes and attempted transfers to newly linked wallets – occur, until the exchange verifies an account holder’s identity.

Arbitrator found the complaint had been filed too late, and that the customer had admitted that a third party rather than a Coinbase insider had performed the theft. Doesn’t appear the arbitrator investigated the claims of a possible breach, or how the hardware MFA was bypassed.

Here, it is undisputed that the unauthorized transfers occurred between September 7 and 9, 2022. Thus, Claimant needed to file his Demand by September 7, 2023. Claimant, however, did not initiate this action until January 5, 2024—well over one year later. Claimant’s EFTA claim is consequently barred by the applicable statute of limitations. In its opposition, Claimant contends that the limitations period began running only after Respondent’s refusal to investigate or refusal to refund Claimant’s account. (Opp., at 4-5.) Claimant cites no authority to support its assertion that the statute runs at a later time (such as upon completion of the exchange’s investigation). Moreover, even if the Arbitrator were to adopt Claimant’s unsupported view of the law, the undisputed facts show that Respondent investigated his complaint in September 2022 (the same month as the loss) and informed Claimant on October 1, 2022 following its investigation that his account was compromised by a third party, and that Coinbase was unwilling to reverse the transactions. Even under Claimant’s proposed rule, his claim had to be filed no later than October 1, 2023, still many months before he actually initiated this Arbitration. Second, the undisputed facts show that a third party, not Coinbase, caused Claimant’s damages. Causation is an essential component of all of Claimant’s causes of action. While Claimant initially pled that his loss must have been the result of an inside job, recently-produced materials show that allegation to be false. On September 9, 2022, Claimant filed a complaint with the Internet Crime Complaint Center (“IC3”). In that complaint, Claimant asserts that his “Coinbase account was scammed,” and identifies the name and phone number of the third-party scammer. Claimant did not disclose this complaint, or the identify of the scammer, to Respondent until December 2024, just days before the oral argument on this Motion. For its part, Respondent submitted a verified declaration that the individual named in Claimant’s IC3 complaint is not a Coinbase employee, and the phone number listed is not a Coinbase number.
Claimant does not dispute these facts in its briefing. In other words, Claimant’s damages were the result of an intervening and superseding cause: the actions of a third-party scammer. Coinbase, as a matter of law, cannot be held liable for Claimant’s damages. See May v. Google, LLC, No. 24-CV-01314-BLF, 2024 WL 4681604, at *10 (N.D. Cal. Nov. 4, 2024). Third, Claimant’s supplemental production also eviscerates many of Claimant’s other causes of action. For example, in his Demand, Claimant alleges that Coinbase never advised users that staked ETH could be wrapped and traded before his September 2022 loss. In its Motion and Reply, Coinbase previously relied on public statements announcing the launch of cbETH as early as August 2022. Claimant’s belated production, attached to Respondent’s supplemental briefing, also contains undisputed facts that Claimant was himself actually informed about cbETH’s launch before his funds were stolen. This disclosure significantly undermines Claimant’s misrepresentation claims under common law, securities law, and commodities law. Fourth, the parties’ contract forecloses many of Claimant’s causes of action. For example, Claimant’s breach of contract claim is undercut by section 6.6 of the UA, which explicitly apportions the risk of account compromises to Claimant as the user: “Any loss or compromise of . . . your personal information may result in unauthorized access to your Coinbase Account(s) by third-parties and the loss or theft of any Digital Assets and/or funds held in your Coinbase Account(s) and any associated accounts, including your linked bank account(s) and credit card(s). . . .We assume no responsibility for any loss that you may sustain due to compromise of account login credentials due to no fault of Coinbase.” Moreover, the UA’s choice-of-law provision in section 9.5 restricts Claimant to California law, foreclosing Claimant’s Idaho and Oregon-based causes of action. In addition, the UA and California law effectively cut off Claimant’s tort claims, such as his negligence cause of action. See, e.g., Berk v. Coinbase, Inc., 840 F. App’x 914 (9th Cir. Dec. 23, 2020) (Coinbase owes no independent tort duty of care beyond the promises made in the UA). Finally, there are other independent reasons why Claimant’s Demand cannot succeed. For example, Claimant’s cause of action for “unjust enrichment” fails because “there is no [such thing as a] cause of action in California for unjust enrichment.” Melchior v. New Line Prods., Inc., 106 Cal. App. 4th 779, 793 (2003). As another example, Claimant submitted no evidence of any false statements made by
Coinbase, about anything, to anyone. As a final example, Claimant’s CLRA cause of action likewise fails, as courts have consistently held that the CLRA does not apply to cryptocurrency exchanges like Coinbase. Jeong v. Nexo Fin. LLC, 2022 WL 174236, at *23 (N.D. Cal. Jan. 19, 2022); see also Suski v. Marden-Kane, Inc., 2022 WL 3974259, at *7 (N.D. Cal. Aug. 31, 2022) (dismissing CLRA claim with prejudice as cryptocurrency was not a “good” and Coinbase’s cryptocurrency exchange was not a “service”); Doe v. Epic Games, Inc., 435 F. Supp. 3d 1024, 1046 (N.D. Cal. 2020) (“Plaintiff’s CLRA claim therefore fails because the virtual currency at issue is not a good or service.”). As other legal issues and undisputed facts bar relief, the Arbitrator need not address the remaining reasons why Claimant’s Demand fails. The Arbitrator joins Respondent in noting that Claimant’s loss is unfortunate, regrettable, and upsetting. Claimant lost considerable funds, was clearly injured, and was the victim of a terrible scammer who feeds off other people’s misfortune and hard work. But the wrong-doer is not a party to this Arbitration. And the law and the parties’ contract ultimately do not make Coinbase responsible for Claimant’s loss based on the circumstances. IV. CONCLUSION Respondent’s Motion for Summary Judgment is GRANTED. Claimant’s claims against Coinbase are dismissed. The final hearing, and all other applicable deadlines, are off-calendar. ______December 17, 2024_____ _____________/s/ Diana Kruze______________________ Date Diana Kruze, Arbitrator

A Coinbase data breach filing with the Maine Attorney General finally gives us some more detail than Coinbase’s vague “less than 1% of monthly transacting users”. 69,461 people were affected, and Coinbase says the data breach occurred on December 26, 2024.

Data Breach Notifications Entity Information Type of Organization: Financial Services Entity Name: Coinbase, Inc. Street Address: 248 3rd Street #434 City: Oakland State, or Country if outside the US: CA Zip Code: 94607 Submitted By Name: Michael Rubin Title: Attorney Firm name (if different than entity): Latham and Watkins LLP Telephone Number: (415) 395-8154 Email Address: michael.rubin@lw.com Relationship to entity whose information was compromised: Outside Counsel Breach Information Total number of persons affected (including residents): 69461 Total number of Maine residents affected: Approximately 217 If the number of Maine residents exceeds 1,000, have the consumer reporting agencies been notified: Date(s) Breach Occured: December 26, 2024 Date Breach Discovered: May 11, 2025 Description of the Breach: Insider wrongdoing Information Acquired - Name or other personal identifier in combination with: Notification and Protection Services Type of Notification: Written Date(s) of consumer notification: May 30, 2025 Copy of notice to affected Maine residents: Appendix_A_-_Coinbase_Template_Individual_Notification_Letter.pdf Date of any previous (within 12 months) breach notifications: 07/16/2024 Were identity theft protection services offered: Yes If yes, please provide the duration, the provider of the service and a brief description of the service: We are offering all impacted individuals one year of free credit monitoring and identity protection services provided by IDX. The services include credit monitoring, a $1,000,000 insurance reimbursement policy and identity restoration, and dark web monitoring to identify if any information is made available through illegal online forums.

It took them almost five months between the incident and the incident disclosure, although the company has since admitted it knew customer support agents were suspiciously accessing customer data as far back as January.

Security researchers who have spent months trying to call Coinbase’s attention to serious issues at the company are disputing Coinbase’s claims about the timing of the breach. “Threat actors had ongoing access via multiple insiders over a prolonged period of time.”

Oh good apparently now the Coinbase breach happened on Dec 26, 2024. LOL So since Coinbase won't be straight with you, I will. Threat actors had ongoing access via multiple insiders over a prolonged period of time. (Screenshot of Maine AG notification)
As evidence, here's a very small cutout of one high value customer's Coinbase account. This wasn't pulled on Dec 26, 2024 honey. (Screenshot showing dates between 2025-02-07 and 2025-02-10)

The SEC requires material cybersecurity incidents be disclosed within four business days; state laws often have a 30-day disclosure deadline. It’s not clear if customers outside the US were affected; if so, other disclosure laws may apply.

Adam Levitin on the GENIUS Act:

[I]n regard to cash deposits, the stablecoin investors will have priority over the claims of ma-and-pa for their bank deposits (and thus over the FDIC's subrogation claim when it pays ma-and-pa).

Yes, you read that correctly: Congress is about to put the claims of stablecoin investors ahead of ma and pa's bank deposits. That's just stunning. Now ma-and-pa's deposits are FDIC insured, so they'll be alright, but it means the FDIC's Deposit Insurance Fund is footing the bill. In other words, the GENIUS Act is subsidizing stablecoin issuance on the back of bank deposits. By subordinating the FDIC's subrogation claim in a bank insolvency to the claims of stablecoin investors, the GENIUS Act is effectively letting FDIC insurance leak out to cover uninsured stablecoins, without any insurance premiums paid.
“Forcing Bank Deposits to Subsidize Stablecoins: the GENIUS Act”.
Adam Levitin in Credit Slips.
Whatever else one might think about stablecoins or the GENIUS Act, its insolvency provisions are an absolute mess, both conceptually and in drafting. If the GENIUS Act becomes the law, we're in for a FUBAR situation when a stablecoin issuer ends up insolvent. Even more concerning, if a bank custodian for a stablecoin issuer's reserves ends up insolvent, the claims of the stablecoin investors will come ahead of the bank depositors. That's right. Crypto comes ahead of ma-and-pa.  The effect: stablecoins are being subsidized by bank deposits. Now that's GENIUS.

In April, Coinbase announced changes to its user agreement that added two clauses further limiting class action lawsuits and requiring lawsuits to be filed in New York. The changes apply to disputes initiated after May 15.

On May 14, Coinbase disclosed a data breach.

Coinbase logo  4/12/2025 Update to the Coinbase User Agreement We are emailing you about an important upcoming update to the Coinbase User Agreement. This update will revise our Arbitration Agreement with you. We made these updates to streamline the process for resolving disputes. You can read the entire agreement here. The revised terms are in sections 9.9, 9.10 and Appendix 6. These terms apply only to disputes that you or we initiate after May 15, 2025. The current terms will continue to apply until May 15. Please make sure you read the updated User Agreement. Thank you for being part of the crypto economy! Team Coinbase
9.9. Class, Collective, Representative, and Mass Action Waiver and Jury Trial Waiver. You and Coinbase agree that, except as specified in the Batch Arbitration Provision set forth above, each of us may bring claims against the other only on an individual basis and not on a class, representative, or collective basis or as part of a mass action (such as a mass arbitration), and the parties hereby waive all rights to bring or to participate in such actions in arbitration or in court to the maximum extent permitted by applicable law. This provision does not prevent you or Coinbase from participating in a class-wide settlement of claims. YOU AND WE AGREE TO WAIVE OUR RIGHTS TO A JURY TRIAL. To the extent that any Dispute proceeds in court, and to the maximum extent permitted by applicable law, you and we agree to waive any right to a jury trial and have such matter resolved by a judge (also known as a bench trial). 9.10 Forum Selection. Unless you and Coinbase agree otherwise, to the maximum extent permitted by applicable law, the state and federal courts in New York, New York (except for small claims courts, in which case you and we agree to resolve our Disputes in a small claims court of competent jurisdiction) will have exclusive jurisdiction over any Dispute that is not subject to arbitration or over any action involving the applicability or enforceability of the Dispute Resolution section 7 or any portion of the Dispute Resolution section (including the Arbitration Agreement, Appendix 5). You and Coinbase consent to the exclusive jurisdiction of these courts and waive any objections as to: (1) personal jurisdiction or (2) the laying of venue in such courts because of inconvenient forum or any other basis or right to seek to transfer or change venue of any such action to another court.

Five lawsuits have been filed against Coinbase in response to the breach since then: all class action, none before May 15, two outside of New York.

Alex Mashinsky has been sentenced to twelve years in prison for his Celsius fraud, which culminated in the mid-2022 collapse of his US-based cryptocurrency lending firm with customers suffering losses of more than half a billion dollars.

Prosecutors have requested Alex Mashinsky, CEO of the collapsed Celsius cryptocurrency company, be sentenced to at least twenty years in prison for his "sustained, calculated campaign of deceit carried out over years, targeting ordinary people."

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Prosecutors say that such a severe sentence is necessary not only for deterrence, but because despite his guilty plea, Mashinsky has not fully accepted responsibility for his actions.

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Sentencing guidelines recommend a 30 year sentence, which is only because of the statutory cap resulting from his guilty plea agreement; otherwise the recommendation would be life. Mashinsky has argued he should be sentenced to no more than a year in prison. Sentencing will happen on May 8.

Quote from man sued: "What are you gonna do, sue me?"

Kevin O'Leary has sued crypto personality Ben Armstrong (aka "BitBoy Crypto") for repeatedly claiming O'Leary murdered two people.

27. On March 19, 2025, Armstrong unleashed another tweet accusing O’Leary of committing “actual crimes”: “Doesn’t everybody think it’s weird that I’ve been publicly calling … @kevinolearytv [a] murderer[] and yet not a single word or legal action? It’s almost like they ‘can’t’ because a lawsuit would open up their actual crimes and they know it.”

(O'Leary and his wife were indeed involved in a boating collision that killed two people in 2019; O'Leary states in the lawsuit that it was his wife driving the boat, and she was acquitted of any charges.)

BitBoy also suggested that O'Leary was trying to have him killed, and claimed he'd swatted him. Shortly after, he posted O'Leary's cell phone number and encouraged his followers to "call a real life murderer"

Armstong launched his defamatory campaign on March 17, 2025. On that day, he posted the following: “You guys think I’m kidding about all this stuff and all these claims. There is a reason my life is actually in danger. Kevin O’Leary has already verifiably murdered one couple in Toronto.” Over 30,000 people viewed this tweet. Tweet screenshot: The BitBoy @BenArmstrongsX You guys think I'm kidding about all this stuff and all these claims. There is a reason my life is actually in danger. Kevin O'Leary has already verifiably murdered one couple in Toronto. You don't think Mr One-To-2-Inch would try to kill the old BitBoy? He SWATTED me once
Tweet screenshot: The BitBoy @BenArmstrongsX Hey @kevinolearytv, what the fuck are you going to do with me? You can't sue me. You can't stop me. You can't shut me up. I'm a rabid dog with my teeth sunk deep into your leg. Your usual tricks don't work. Going to be hard to put the rabid dog down with everyone watching.

Amusingly, BitBoy once tried to file a defamation lawsuit of his own against a YouTuber who called him a "shady dirtbag". He dropped the suit almost immediately after the YouTuber raised over $200,000 for his defense, and Armstrong admitted he didn't know lawsuits were public.

It's not clear that BitBoy even knows he's been sued yet; he was arrested two days ago after sending threatening emails to the judge in a different defamation case he's facing from his former business partners after he publicly accused them of various crimes.

Coinbase Chief Legal Officer Paul Grewal again making oblique legal threats to chill criticism of Coinbase, suggesting to The Hill that it might be “defamatory” for me or Public Citizen to draw a line from their political spending to the current crypto regulatory environment.

Now, critics are putting the industry’s ramped-up campaign involvement last cycle under a microscope. Molly White, a cryptocurrency researcher and prominent crypto skeptic, argued the SEC’s changes in direction were the “goal of a lot of the election spending over the last couple of years.” “I think that the political contributions were quite directly related to both the changing regulatory environment in terms of, you know, broad policy direction, but also in terms of dropping the enforcement action,” White told The Hill. Public Citizen, a nonprofit consumer advocacy organization, slammed Coinbase and the SEC last week, arguing the industry’s campaign spending “paid off.” “The SEC decision is also an important marker in the Trump administration’s rush to abandon prosecution and enforcement actions against corporate criminals and wrongdoers,” Public Citizen co-President Robert Weissman wrote. “This is not just an abandonment of those already wronged by corporate wrongdoers, it is an invitation to a corporate crime spree and epidemic of corporate wrongdoing.”
Coinbase, along with other figures in the crypto world, fiercely rejected the criticism, pointing out opposition to Gensler’s probes was brewing for years. This included long before Trump publicly reversed his stance on crypto to back the industry in late 2023. “I find those comments misinformed at best, if I’m being generous, and defamatory at worst,” Paul Grewal, chief legal officer at Coinbase, told The Hill of the backlash. Some criticism, Grewal argued, fails to consider Trump was once a critic of crypto and at one point called it a “scam.” Grewal pointed out how Congress moved major legislation in 2023 on market structure, an issue that was met with bipartisan support. The Financial Innovation and Technology for the 21st Century Act in 2023 received support from 71 Democrats in the House. “The fact of the matter is that President Trump did evolve and transform in his view on crypto, really starting in December 2023,” Grewal said. “In January 2024, we first started to engage with him and his team, but it was against a much more nuanced, complicated and complete history that I think a lot of the critics just don’t want to engage in.”

Previously:

Tweet by paulgrewal.eth on October 30, 2024 @iampaulgrewal Once again, with feeling. Repeating misrepresentations of facts after previously being put on notice is …. unwise. Quoted tweet by Molly White @molly0xFFF As an active federal contractor, Coinbase is prohibited from making political contributions, including to super PACs. This makes $50 million that they have contributed in violation of pay-to-play laws for contractors.

“Some criticism, Grewal argued, fails to consider Trump was once a critic of crypto and at one point called it a ‘scam.’ ... ‘[It’s a] more nuanced, complicated and complete history that I think a lot of the critics just don’t want to engage in.’”

Huh.

Screenshot of Molly White’s Citation Needed newsletter: “Recently, there has been a push by the cryptocurrency industry to portray crypto as a major issue that will influence votes in the upcoming election season. This just so happens to coincide with Donald Trump's recent statements suggesting he's warmed to the industry. Although Trump personally has actually been far more vocally anti-crypto than Joe Biden — in 2021 saying bitcoin “just seems like a scam”1 and reportedly ordering Treasury Secretary Steve Mnuchin to “go after bitcoin” in 20182 — that hasn’t stopped many in the cryptocurrency world from embracing him as the supposedly pro-crypto candidate anyway. Screenshot of Trump tweets: I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.... ....Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National... ...and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar! It's not entirely clear why Trump has done a U-turn. Perhaps it's simply because supporting crypto has become the Republican thing to do. Perhaps it was because he himself discovered the grift potential this industry unlocks when released his own set of NFTs in 2022 [W3IGG]."
Screenshot of a Public Citizen article titled “Guaranteed Crypto Loss”: “Bitcoin, a cryptocurrency, is “based on thin air.” It is a “scam.” It can facilitate unlawful behavior, including drug trade and other illegal activity.” These are Public Citizen positions. But they are also direct comments from then President Donald J. Trump. Public Citizen continues to believe cryptocurrency is a Ponzi scheme and enables illicit activity. It also wastes enormous energy, contributing to climate change. We support the efforts of the Securities and Exchange Commission (SEC) to enforce securities law with respect to these public offerings, and of criminal law enforcers to arrest crypto actors who engage in fraud and other market manipulations. The FBI reported crypto-related fraud exceeded $5 billion in 2023. Trump, however, has pivoted into full-throated and potentially self-enriching endorsement of the sector. He now serves as the “chief crypto advocate” for World Liberty Financial, a nascent cryptocurrency firm. If elected president, Trump would have a glaring conflict of interest as Washington attempts to address policy for this fraud-ridden sector.”

taking psychic damage reading the lawsuit by Justin Sun’s Bit Global against Coinbase

COINBASE’S NONEXISTENT LISTING “STANDARDS” 62. While Coinbase claims to have made the decision to delist wBTC to adhere to the company’s “listing standards,” the truth is that Coinbase has virtually no standards for what can be listed at all. Around the same time that it was delisting wBTC, Coinbase has onboarded various “memecoins” which unlike wBTC have no inherent value other than demand created by their memetic potential as jokes. The decision to allow users to trade these memecoins makes clear that Coinbase did not delist wBTC because of any listing standard, but because Coinbase coveted wBTC’s market share and wanted it for itself. 63. On November 13, 2024, Coinbase announced that it was listing a memecoin called PEPE, named after a controversial picture of a cartoon frog which has been identified as a hate symbol and/or a “racist frog.” The coin is promoted to “Dank Meme Enjoyoors” with an official website that purports to perform an “Autism Test” on their computers to ensure that the user’s autism is over 9,000 before proceeding.17

i have to respect the argument that “memecoins... unlike wBTC have no inherent value other than demand created by their memetic potential as jokes”. your honor, wBTC’s lack of inherent value is for a different reason entirely

Celsius CEO Alex Mashinsky has entered a guilty plea in his criminal fraud trial, which was scheduled to begin in about two months. His Celsius cryptocurrency platform collapsed in July 2022 after it couldn't meet customer withdrawal demands. Its failure was particularly devastating because it had actively marketed itself to customers as safer than banks, regularly telling customers that "banks are not your friends". Many people believed that because Celsius was based in the US, it was carefully regulated and therefore safe.

Alex Mashinsky wearing a "banks are not your friends" t-shirt onstage at WebSummit 2021

Letters written to the judge in the bankruptcy case revealed the extent of the devastation to people around the world, some of whom had their entire life savings or retirement money on the platform. I published some excerpts back in July 2022.

These Celsius letters to the bankruptcy judge should be required reading for anyone who thinks that the only victims of crypto collapses are degens out there gambling on memecoins.

They thought they were insured from losses (and some believed Celsius had FDIC insurance like a bank would). Some of them only had money in stablecoins, which themselves make big promises about reliability. They believed US regulators wouldn't let this happen.

These letters are a big reason why I don't have a lot of patience for people who react to crypto scams with "they should have known better" or "they had it coming".