By Santiago A. Cueto

Have you ever received an email that is so fascinating that you have to read it out loud to make sure you that you read it correctly?

I received one of those several days ago.

The email asked the following question:

“This past summer I purchased [factory equipment] in [Country X] with Bitcoin.  I never received the equipment and [the supplier] won’t respond to my messages. Is it possible to file a lawsuit against [the supplier] even if I used bitcoin?


I had to re-read the email several times to make sure I understood what I was reading.

I have heard of people buying all kinds of things with Bitcoin, mainly consumer goods and even trips to space.

But this was the first time I learned of Bitcoin being used as a payment method in a major international business transaction.

And it’s certainly the first time I read anything about anyone contemplating a lawsuit based on a failed bitcoin transaction.

My mind raced with all the implications behind the question, i.e.Is it possible to file a lawsuit against [the supplier] even if I used bitcoin?

I could think of only more questions:

  • Why, for example, did this person use bitcoin to make the purchase instead of using a conventional payment method?
  • Is bitcoin considered legal currency in the U.S.?  How about in other countries?
  • Can one sue for breach of contract where payment was made using bitcoin?
  • Could a court seize the defendant’s bitcoin account? How is “bitcoin jurisdiction” determined?

Bitcoin Basics. 

Let me back up a bit to explain what bitcoin is for readers who may not be familiar with it.

In the most basic terms, Bitcoin is a decentralized digital currency that enables instant payments to anyone, anywhere in the world.

It uses peer-to-peer technology to manage transactions and issue money with near real-time confirmation.  The price of ฿1 bitcoin is currently near the $1000 mark.

Bitcoin Gaining International Legitimacy

Getting back to the question whether a bitcoin-based lawsuit is possible, it’s  my impression is that a cause of action would be viable, at least here in the United States–putting any jurisdictional issues aside for the moment.

A recent SEC decision is guiding and supports the proposition that bitcoin is a legitimate currency.  Just a few months ago, the court in SEC v. Shavers held that bitcoin was a “form of money” subject to regulation by the Securities and Exchange Commission.  (Civ. No. 13-416 E.D. Tex. Aug. 6, 2013).

While the U.S. is just beginning to