The World’s First Bitcoin Lawsuit—in the United States?
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.
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?
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. In SEC v. Shavers, the court 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 address the issue, other