Bend attorney William Wardlow tried to buy $2,000 in bitcoin through the trading platform Coinbase.com on Oct. 11 but was met with a demand that he upload a driver’s license and photograph of himself.
The photo identification was more than Wardlow is willing to share, so he never completed the transaction, though he says Coinbase had sent him a message telling him he was good to go. One bitcoin was worth $4,829.22 at that time, according to a lawsuit Wardlow filed with Deschutes County Circuit Court. The price reached more than $18,000 by mid-December before beginning a slide that left it at $11,397.58 Friday afternoon.
Wardlow alleges in the lawsuit that he missed out on a huge trading opportunity because of Coinbase’s photo identification requirement, which also was not spelled out in the company’s terms and conditions. He’s seeking damages and an order stopping Coinbase’s business practice.
“At the very minimum, they need to disclose this additional requirement, which I consider really, really intrusive,” Wardlow said. “I’m really big on personal privacy. It’s unfortunate more people don’t put their foot down.”
Wardlow’s case is a new twist on an increasingly common complaint about lack of access to cryptocurrency trading platforms. The Oregon Department of Consumer and Business Services issued a warning this week after two consumers complained that they couldn’t get help accessing their accounts.
“Turning cash into digital currency is easy, but it can be difficult to turn it back into cash when you need it,” according to a statement released by the department.
Coinbase acknowledged in a Jan. 10 blog post that it hasn’t been able to keep up with demand.
“It’s no excuse but we think we owe you an explanation of what happened in 2017, what we’ve done and what we are doing to fix the issues,” general manager Dan Romero wrote.
Coinbase grew its customer-support capacity by 60 percent in November and December, but transaction volumes grew by 295 percent, according to the blog post.
The Bulletin sent a message to the Coinbase press contact about Wardlow’s suit. The company responded from the account firstname.lastname@example.org, which stated, “Thank you for submitting your request. We have received your request and are working on responding to you as soon as possible.”
Portland consumer lawyer Michael Fuller said he’s heard complaints from potential clients about other digital currency exchanges.
“We’ve seen these cases and passed on ’em,” Fuller said. “Even if we did prevail, could we collect?”
It’s hard to tell whether the cryptocurrency traders are legitimate businesses, he said, and where they keep their assets. In addition, they’ve included arbitration clauses in their consumer agreements that preclude class-action suits, he said.
Wardlow is relying on an Oregon law that could force Coinbase to pay attorney fees, which Wardlow may legally pay to himself. Wardlow, who has also sued CenturyLink and U-Haul over business practices, said knowing he’ll be reimbursed for his time makes it possible to pursue cases that benefit all consumers.
“When companies do something to me, I’m confident they’re doing it to thousands, if not tens of thousands of Oregon consumers,” he said. “It’s what motivates me to practice law. It’s too easy to get paid and argue for whoever writes you a check.”
The law, which applies to claims worth less than $10,000, was designed to encourage insurance companies to settle small claims related to car accidents, Fuller said.
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