Bitcoin Forum

Besides these direct damages, TradeHill is also claiming damages resulting from Dwolla's actions, including the harm to TradeHill's reputation and the loss of bitcoin.com, a very valuable domain.

WTF how does this happen? Didn't have enough cash on hand to pay a $10 renewal fee to the registrar? Please enlighten me, and correct me if I am wrong.

No, that wouldn't be forgivable. We acquired the domain and as part of the deal we were contractually obligated to keep the exchange running. When we decided to shut the exchange down we returned the domain to the original owner who I believe is going to do good things with it. It will revert over in a few days most likely.

-Jered

No, that wouldn't be forgivable. We acquired the domain and as part of the deal we were contractually obligated to keep the exchange running. When we decided to shut the exchange down we returned the domain to the original owner who I believe is going to do good things with it. It will revert over in a few days most likely.

-Jered

Who is this so-called "owner" ?

Satoshi maybe :o

Who is this so-called "owner" ?

Satoshi maybe :o

Good luck Jered.  It's very clear to me that what Dwolla was providing was nothing more than a value add on top of ACH…while I've not reviewed their original terms of service, it seems they were asserting that their transactions were not reversible, yet when they had some ACHs reversed on them, they didn't follow through on that commitment.

WIsh you all the best luck with your case.



What if the original owner of bitcoin.com was RealSolid? ^^

As a result of these losses, TradeHill was unable to pay its employees and was forced to shut down exchange operations on February 13, 2012.  We did not want to do this.  We believe in Bitcoin and greatly enjoyed being involved in the community in such an integral way.  Though we had hoped to continue different business operations on bitcoin.com, we were contractually obligated to return that domain name (along with bitcoin.co and bitcoin.co.nz) once we stopped operating as an exchange.  As such, bitcoin.com is no longer owned and operated by TradeHill.

I am extremely surprised. As far as I know, you did not disclose to us that the bitcoin.com domain have a constructional obligation tied into it until today. Now, it simply redirect to bitcoin.org.

Who is the owner of this bitcoin.com and what are they going to do with it? Is it satoshi.

You can voice your opinions at Dwolla's Facebook page:

https://www.facebook.com/#!/dwolla (https://www.facebook.com/#!/dwolla)

Best of luck guys. Besides damages and the money they stole from you, Dwolla should get jail time for this.

They would have to have been proven to have intent to defraud their merchants, which I doubt they had.

This seems more like a case of them just not doing what they promised they'd do, and doing what they promised they wouldn't.

Jial? Seriously?

We wanted to keep operating and hold on to the domain but it just wasn't possible. Ideally it wouldn't have mattered that we had that obligation but things changed when we lost the funds. We weren't able to innovate and had to cut all the features / employees we had planned. I've personally blown all my savings to stay afloat.  

Editing old account statements to erase reversed credits, in order to hide when they removed funds from the account? Um hell yes, jail. That's fraud.

That's hearsay. You'd have to prove that's why they were erased. On that note-- what proof do you have that they erased records?

Does Tradehill have a list of records that doesn't match Dwolla's? If so, how do you know Tradehill didn't forge them?

(For the record, I hope justice is served, but don't be so quick to pick sides and pretend that anything against Bitcoin businesses is worthy of jailtime.)

Either you're incredibly ignorant of this situation, or you're trolling again. Either way, you look like an ass.

This is really a civil matter.  Jail time sounds like the ridiculous demand of a lynch mob.  Frankly, I think $2M is pretty optimistic though, on ~100k of direct damages. Hope it works out well for them.

And for the record, I think he looks like a horse.

This is really a civil matter.  Jail time sounds like the ridiculous demand of a lynch mob.  Frankly, I think $2M is pretty optimistic though, on ~100k of direct damages. Hope it works out well for them.

And for the record, I think he looks like a horse.

Longtime angel investor Steve Smith said the lawsuit filed against Dwolla could be “sour grapes” and that the timing of the lawsuit after months of trying to come to an agreement is questionable. Dwolla recently raised $5 million for its operations from venture capital firms across the country.
 
“This is the practical reality of the current business environment we live in,” Smith said. “Lawsuits are just becoming an increasing part of the business community.”

If a financial institution you trusted did the same thing to you, I'm betting it'd sound a lot less "ridiculous." But I didn't make any demands, I was just showing my support. This was a despicable act.

Let's all support TradeHill for realistic expectations and realistic settlements, and open to the possibility they might actually be in the wrong, not Dwolla.

Anything else is blind fanboyism and we don't have room for that in a cryptocurrency already considered a scam and ponzi by most of the nerd world.

Let's show our intelligence and look at evidence. Jered hasn't provided any to us because his lawyer doesn't want him to at this point.

e.g. There is nothing to support.

How can you call anyone else blind when you admit you're completely ignorant?

Supposing that Tradehill engineered their own downfall in order to take Dwolla to court

Editing old account statements to erase reversed credits

Pretty easily actually. I just did!

Sorry, didn't read because it had nothing to do with what I was talking about and you're just spouting conspiracy theories as a defense.

Since you didn't get my point, I'll reiterate:

Don't trust people or companies just because they claim things. If the company themselves are not willing to share the documents that they claim prove something, then hold off on the fanboying until you know for sure.

How is that not simply common sense?

I don't have a dog in the fight. If Dwolla losses the suit because a judge finds them guilty of fraud, I'll say "Good job Tradehill!" and if Dwolla wins because TradeHill had no evidence and just couldn't deal with losing money I'll say "Good job Dwolla!".

This community is thick sometimes. We're not talking about supporting a friend, we're talking about staking reputations on something we have no evidence for.

You think I'm ignorant for not wanting to do that? Wow.

Where are the documents that have had the transactions removed?

I based mine on all the information that anyone not directly involved with this lawsuit can reasonably expect to get, and I'm fairly confident that my conclusion is correct.

So instead of arguing about what MY opinion should be, maybe you should go do your homework.

Here we go, publicity! Hope to see an article on this in ArsTechnica....

From all of my experiences with Dwolla it seems like they act like a corporation, have no sense of humility, and resembles PayPal.

Many of us have been through the TradeHill fiasco last year.  From what I know about TradeHill they seem to have a lot of integrity since I've seen them in videos, in the forum posts, and in emails.

If you're asking for their books, you're probably not going to get those.

If you want more information, I would start with the Bitcoin Show episode where Bruce had them on live to explain what was happening and try to warn other exchanges. They played some phonecalls with Dwolla that didn't make Dwolla look very respectable.

As a high volume trader I talked to all of the guys that ran Tradehill on a regular basis, mainly as a client, but also as a fellow bitcoin entrepreneur. They are very nice and genuine people. This kind of relationship isn't "hard proof" but I know who I was dealing with and everything they said during that time, as well as now, sounds very credible to me. Not only that, but they had no reason to lie. I trusted them before, during, and ever since with more money than I could afford to lose, and they've always been very transparent and quick to respond (unlike some exchanges.)

So that's why I don't feel it's very fair to call my support for Tradehill "blind fanboyism." I'm an appreciative long-term client, and without working directly for them (hence having access to their private records), I don't think I could reasonably be more informed.

I wasn't trying to be inflammatory with my statement about Dwolla - I guess it came across that way, but I just assumed most people who looked at this thread would have seen more of what I've seen and understand where I was coming form.

Many thoughts running through my mind after reading this. Considering shorting BTC. Dwolla probably relies a lot on Bitcoin-related businesses for revenue, but all the trouble they're having might push them toward dumping all Bitcoin-businesses as Paxum did instead of fixing their problems. Dwolla's a pretty small start-up... Hopefully they can't afford to dis-associate from Bitcoin. I know a LOT of people who use Dwolla. It's pretty darn close to free for US citizens to get cash into an exchange, and it's the only method I've ever used to transfer money into reserves. So close to seeing a sustained push through $5, too. Hmm.

Either way - good luck, TH.

We're a small portion of their business now and they are never really part of our community to begin with.

“When we started, I was kind of naive,” said Milne. “I just called up the regulators and asked how we should do this. Luckily they didn’t shut us down. So yeah, we have a good dialogue going on with Federal Reserve.”

http://www.betabeat.com/2012/03/06/dwolla-releases-statement-on-that-bitcoin-lawsuit/

TH hasn't served the lawsuit yet to Dwolla.

http://www.reuters.com/article/2012/02/07/idUS94197123920120207
http://www.betabeat.com/files/2012/02/ben-milne.png

http://www.betabeat.com/2012/03/06/dwolla-releases-statement-on-that-bitcoin-lawsuit/

TH hasn't served the lawsuit yet to Dwolla.

I understand arming yourself with as many complaints as possible but don't think there is any legal reason why they would be held responsible for a private agreement related to bitcoin.com.

The damages are a consequence of their fraud. If someone intentionally and wrongfully throws a rock through your window when you're not home, and as a result, the rain damages your painting, shouldn't they also be responsible for the damage to the painting? Replacing the window doesn't make you whole.

Right, and when that rain water causes a letter you were writing to your aunt in Georgia to be destroyed telling her not to marry Mr. Butler because he is a gold digger and the wedding goes on as planned, later ending in a divorce that costs your aunt half of her estate, should the rock thrower pay for what the aunt lost in the other contract as well?

Honestly, I don't know which side of the line this case falls on.

I don't either. TradeHill hasn't really released their "smoking gun" so everything is speculation at this point.

Note Ben's uppercase use of "Day One".  Ben is a liar.  As a midwesterner, I am ashamed Ben is from Iowa.

Unfortunately, lying in a public statement or even being incorrect in a claim is not against any laws.

May not be against the law but can be used against you in the court of law.

I wish I noticed this when I signed up.

https://i.imgur.com/Walch.jpg

If you're asking for their books, you're probably not going to get those.

As a fellow midwesterner, I'm ashamed of Iowa period.

I can no longer access the Dwolla TOS

I can no longer access the Dwolla TOS:

https://www.dwolla.com/​tos

Wait, I can access it...testing: https://www.dwolla.com/tos (https://www.dwolla.com/tos)

UPDATE: Something seems to be wrong with the link I posted.  The above link works.

... "Dwolla and its executives have been named in a federal lawsuit seeking $2 million in damages and alleging nine different offenses, including racketeering, false advertising, breach of contract and intentional misrepresentation.

TradeHill, an online currency exchanger based in San Francisco and Chile, filed the 19-page lawsuit Monday. It names CEO Ben Milne and COO Charise Flynn, along with the company and five other undetermined defendants and was filed in a northern California court." ...

Source: http://blogs.desmoinesregister.com/dmr/index.php/2012/03/06/bitcoin-exchanges-files-lawsuit-against-dwolla/

Source: http://blogs.desmoinesregister.com/dmr/index.php/2012/03/06/bitcoin-exchanges-files-lawsuit-against-dwolla/

"Bitcoin's chargeback problem" - oh, the irony.

I think they meant "Bitcoin's NO chargeback problem"... idiots!

My prediction is that Dwolla will settle for somewhere between 100k and 500k, because it seems like there is a valid argument that they did not pass liability of chargebacks onto their customers in their original TOS.

Afterwards, they can contact a Meze Grill customer on how to get out from paying the settlement.

I think they meant "Bitcoin's NO chargeback problem"... idiots!

Chargebacks don't protect the consumer, it protects the morons and the crooks.

Chargebacks don't protect the consumer, it protects the morons and the crooks. Back in the day when you had to pay with coins, cash or tade, people did their math before forking over the money to somebody. Another dent on darwinism. Let's keep the idiot's money safe! Learn how to secure your wealth and how to spend it, because if you don't somebody (the merchant) will have to pay for your sorry ass! Sorry I am getting all riled up here :D

If you mean ACH chargebacks, 100% agree. If you mean credit card chargebacks, 100% disagree. (The big difference is that an ACH transfer is an actual payment. A credit card is an extension of credit.)

It is an extension of credit on the customer, not the merchant. If the customer does something dumb with the line of credit, it should be their responsibility, not the merchant's. At most, it should be a problem shared by the customer and the bank that extended the credit. This is akin to a mortgage in a house: if you bought a 400K 1 bdr appartment in LA before the bubble bursted, you and the bank are stuck with the debt, and you pay the price, not the seller of the property.

While I do understand there should be some merchantability protection for the consumer, it seems to me that the merchant ALWAYS ends up paying for the broken dishes, not the banks, and almost never the consumer. This is by the way, after the merchant has already been pounded by some irrational "processing fee" by the credit card companies.

It is an extension of credit on the customer, not the merchant.

If the customer does something dumb with the line of credit, it should be their responsibility, not the merchant's.

At most, it should be a problem shared by the customer and the bank that extended the credit.

This is akin to a mortgage in a house: if you bought a 400K 1 bdr appartment in LA before the bubble bursted, you and the bank are stuck with the debt, and you pay the price, not the seller of the property.

While I do understand there should be some merchantability protection for the consumer, it seems to me that the merchant ALWAYS ends up paying for the broken dishes, not the banks, and almost never the consumer. This is by the way, after the merchant has already been pounded by some irrational "processing fee" by the credit card companies.

Right, that's because mortgages are not like credit cards. In the case of a mortgage, the bank is extending credit directly to the mortgagee.

Joel,

When you pay your credit card's interest rate (APY) you pay it to the credit card company, not the merchant. That is because the credit card company is extending credit to you, and not the merchant. The merchant is agreeing to provide you with certain goods or services in exchange of a lump sum payment, in this case disbursed by the credit card company to the merchant on your behalf, just like a bank disburses a sum lump payment to the seller of a house at the closing on your behalf. There is NO credit extended by the merchant, unless you are paying the merchant with a credit card issued by the merchant (i.e. target credit card, etc).

With your logic, the seller of a house will be providing credit "in part" to the buyer, along with the bank when a mortgage is closed. Months later, if the buyer of the house quits paying, the bank will know on the sellers door and ask for the money back.

A "credit card" is an instrument by which the issuing institution extends credit to the customer, and for which collects interests payments, service fees, etc. The whole point for the merchant (in theory) is to delegate the issuing of credit and mitigate risk to a third party.

In any case, chargebacks have nothing to do with who extends credit. Chargebacks (be it ACH or Credit Cards) can occur for two reasons:

• Fraud: The issuing institution determines that fraud has been committed, so takes back the money.
• implied warranty of fitness for a particular purpose (Non performance, etc which is the norm in commerce in the USA and here in Canada) (http://en.wikipedia.org/wiki/Implied_warranty).

This really have nothing to do to whom the bank is extending credit to, since in both cases the bank is extending credit to the buyer, not the merchant (or seller).

This has to do with the fact that Real Estate sells fall under Caveat Emptor (http://en.wikipedia.org/wiki/Caveat_emptor) i.e. "Buyer be aware". And this brings me to the next point: Before we created a race of retarded morons that can't seem to be able to educate themselves as consumers, the world's economy traded based on Caveat Emptor all the time. You couldn't go to a fucking Roman merchant and be "Can I like ... have my salt back, I am not really feeling this fur color with my skin ....". Yep we have shat all over darwin, and this is what we now have.

Let me give you an example on Real Estate: When you go buy a house you check it out, you hire a home inspector, you have by law 45 days to withdraw or modify your offer if defects are found, you do your research (most likely pay the title company to do it) on the house title, make sure it is free of liens, etc.. etc..

This is because after closing day, if you want your money back, well, guess what? you are jolly well fucked. This is thanks to Caveat Emptor.

Bitcoin works under the premises of Caveat Emptor. The banking world works under the premises of "I freeze your account whenever the fuck I want" and "I charge you back because the customer complained that the chia pet didn't grow grass" etc ... etc... etc...

Caveat Emptor has its downfalls of course, it is not a panacea, but honestly this situation with chargebacks (I have had chargeback requests for international wire transfers dating 6 months ago) is absolutely getting out of hand.

In a true libertarian free market society there is no room to baby the inept through life.

When you pay your credit card's interest rate (APY) you pay it to the credit card company, not the merchant.

That is because the credit card company is extending credit to you, and not the merchant.

The merchant is agreeing to provide you with certain goods or services in exchange of a lump sum payment, in this case disbursed by the credit card company to the merchant on your behalf, just like a bank disburses a sum lump payment to the seller of a house at the closing on your behalf. There is NO credit extended by the merchant, unless you are paying the merchant with a credit card issued by the merchant (i.e. target credit card, etc).

With your logic, the seller of a house will be providing credit "in part" to the buyer, along with the bank when a mortgage is closed. Months later, if the buyer of the house quits paying, the bank will know on the sellers door and ask for the money back.

A "credit card" is an instrument by which the issuing institution extends credit to the customer, and for which collects interests payments, service fees, etc. The whole point for the merchant (in theory) is to delegate the issuing of credit and mitigate risk to a third party.

This really have nothing to do to whom the bank is extending credit to, since in both cases the bank is extending credit to the buyer, not the merchant (or seller).

Right, which you start paying in 30 days or so.

Sure, at that point. But that's the non-chargeback case. That's not what happens if you reverse the charge.

No, one is not "just like" the other. When you buy a house, the seller has *no* agreement with the mortgage company. The mortgage company just pays them. When you buy something with a credit card, there is a contractual arrangement between the merchant and the credit card issuer. These two situations are simply not comparable at all.

I don't understand what you mean by "with my logic". These are two different factual situations. With a home mortgage, the mortgage company only pays the seller. With a credit card, the merchant has a contract with the bank that sets out a different relationship. This is a factual difference, it's not something you can logic out. You have to read the contracts to understand the relationship. (The contracts are not really freely negotiated though. The credit card issuer tells the merchant to take it or leave it, and Federal law sets out many of the requirements.)

To mitigate long-term risk, but not short-term risk. And to avoid having to do credit inquiries and avoid having to meet other requirements. Nevertheless, the bank's agreement with the merchant permits them to refuse to collect from the consumer on behalf of the merchant. A merchant cannot use a credit card issuer to protect themselves from the risks associated with their own non-performance and the consumer need not sue the merchant if they have not yet made payment. That's what the contracts between the merchant and the credit card issuer say.

No, the bank is extending credit to the merchant in the case of a credit card. Why do you think credit card companies bother to investigate merchants or closing down merchant accounts for fraud? The credit card company is collecting the principle on behalf of the merchant and if you do not owe the merchant the principle, you do not owe it to the credit card company. That is the way credit cards work, at least in the United States.

By the way, in the vast majority of cases, this really does benefit the merchants. Very few people would buy a camera from an online store if they had to investigate the camera and the store the way you have to investigate a real estate purchase. And, of course, the credit card issuers don't make much money if consumers are afraid to use their credit cards.

Well it was legal, we just couldn't operate outside of Iowa. For the first two years we built out the platform. We did a sh*tload of testing on a small scale because legally we couldn't launch Dwolla nationwide. We spent two years inside of Iowa fine-tuning Dwolla with the financial institutions, building out some of the initial models, and trying to figure out how to legally do what we do.

How'd you find a legal loophole?

Moving money is an exceptionally regulated business. We're in Iowa, which is sort of conservative — I don't know if that helped us or hurt us, but in the long term I think it helped us. We figured to do this legally, we had two options: we could take in a tremendous amount of money and go out and get licenses, which is how most people do it. But we didn't have access to that kind of capital here.

The other option was to bring in really strategic investors, which is what we did. One of our investors is a financial institution; one is a financial services company.

Our investors do credit and debit processing for banks. So when you get a credit card from your bank, it's being issued by companies like them. Our investors are also distributing our product to financial institutions. So we've been building a payment network, and we can do it legally because of who our investors are.