Coinbase Lien?

[benhieu]

I heard on a podcast that someone stated that the bitcoins one purchases on coinbase have lien on them and it follows that bitcoin. Would appreciate anyone that could give clarification on this.

[c_atlas]

I've never heard of that before. When you say it "follows that bitcoin" do you mean it follows it on the blockchain or throughout Coinbase's system? If they're implying that Coinbase somehow has a way of recovering bitcoin once it transfers to an address that they don't control then that's not true. I haven't used Coinbase before but I'd be surprised if they do any more than take fees on withdrawals & trades. Actually, it seems like they don't even really do deposit/withdrawal fees

[odolvlobo]

I heard on a podcast that someone stated that the bitcoins one purchases on coinbase have lien on them and it follows that bitcoin. Would appreciate anyone that could give clarification on this.

I have never heard this. Can you provide a link to the podcast? Anyway, since bitcoins don't have titles associated with them I think it would be difficult for the lienholder to recover the bitcoins sold to you.

[TryNinja]

Honestly, I can see this happening - and it doesn't surprise me.

Coinbase actually probably helps tons of government agencies with chain analysis to track their users to see where the coins are going to (that's what mixers are for). IIRC, they already block accounts if you deposit from/to gambling websites, so why wouldn't they do the same kind of tracking to see whether the coins are being used for drugs, gambling, or any other illegal shit?

Coinbase blocking someone that deposited into a gambling website: https://www.reddit.com/r/Bitcoin/comments/4t3444/coinbase_is_silently_tracking_how_you_spend_you/

[BrewMaster]

you might have misunderstood the statement or maybe the person explaining it (like most of them) were not familiar with how things work so they misled you.

the thing is when you are using coinbase as your wallet, you are NOT using bitcoin. you are instead using an account with a centralized service that gives you some IOUs in return which are only valid on their platform and you can convert them into bitcoin. so whenever send/receive a bitcoin you are doing it with your account which is also linked to your identity so they can know exactly what you are doing.

[maldini]

Never heard of news like this before, maybe someone who wrote the podcast mispercepted coinbase. If this is indeed the case, this case should have often been discussed

[c_atlas]

you might have misunderstood the statement or maybe the person explaining it (like most of them) were not familiar with how things work so they misled you.

the thing is when you are using coinbase as your wallet, you are NOT using bitcoin. you are instead using an account with a centralized service that gives you some IOUs in return which are only valid on their platform and you can convert them into bitcoin. so whenever send/receive a bitcoin you are doing it with your account which is also linked to your identity so they can know exactly what you are doing.

I never really understood mixers, can't you technically end up with even more tainted btc than what you started with? What incentive is there to mix your btc with a mixer if you didn't acquire it in a sketchy way, especially if you can just do a coin join

[Jet Cash]

I think that the current government checks and regulations for exchanges mean that CoinBase has to be careful when providing wallets, and allowing payments from them. I just use them for a bit of trading, and I've got a variety of non-exchange wallets for the long term storage of coins. I was going to withdraw a bit of Bitcoin to a new address, and let people analyse the transaction, but the only Bitcoin I've got on CoinBase is in an open sale at £2,924, and I don't really want to close that. I'm hoping that there will be a long wick at some time in the near future, and I want to take advantage of that. Perhaps if someone has some  spare Bitcoin in a wallet there, they could post a withdrawal transaction for us to look at.

[UPDATE] Well that was a surprise. It looks as if Bitcoin spiked, and my coins sold. That's given me a bit of profit. My current buy order is at £2,770, so I'm not sure when the price will get there. Opinion still seems to think we are in a bear market, but then opinion is usually wrong until it is right, or should that be the other way round? Anyway, I no longer have any coins on CoinBase to test the original question.

[benhieu]

I heard on a podcast that someone stated that the bitcoins one purchases on coinbase have lien on them and it follows that bitcoin. Would appreciate anyone that could give clarification on this.

I have never heard this. Can you provide a link to the podcast? Anyway, since bitcoins don't have titles associated with them I think it would be difficult for the lienholder to recover the bitcoins sold to you.

Trace Meyer mentioned in an interview with Thomas Hunt at Unconfiscatable Conference.

https://www.youtube.com/watch?v=vC5im-hiHXo&t=1265s

17 min. in

[odolvlobo]

It is a legal issue that is not specific to Coinbase or Bitcoin.

Here is an article that explains it: https://ftalphaville.ft.com/2015/03/24/2122678/bitcoins-lien-problem/

In general, if someone uses an asset for collateral on a loan and they sell the asset and default on the loan, the lender can legally force the buyer to give them the asset. Bitcoin is not immune to this law. So, if someone using their bitcoins as collateral sells them to Coinbase and Coinbase sells them to you, you could be forced by the law to to give the lender your bitcoins.

Stolen bitcoins have the same issue. If you inadvertently or indirectly buy stolen bitcoins, you could potentially be forced to return them.

My own opinion is that it could get messy for a couple reasons. There are no actual bitcoins, and bitcoins are quite fungible. Who can say who got the bitcoins? Also, if you deposit them in another exchange, wouldn't that instantly make it someone else's problem?