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.
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

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[bdbabiak77]

Great interview - thank you! I really like these guys!

[odolvlobo]

I wrote this in the other thread that you started on this subject:

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

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 later 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 has the bitcoins? Also, if you deposit them in another exchange, wouldn't that instantly make it someone else's problem?

[benhieu]

This was coinbase's response.

Coinbase Support <help@coinbase.com>
Feb 22, 2019, 6:40 PM (6 hours ago)
to me

Hi Benjamin,

Thank you for reaching out about this, I recommend reaching out a fiduciary or legal advisor. Coinbase complies with all applicable laws and regulations in each jurisdiction in which it operates.

United States Coinbase, Inc., the company which operates Coinbase and GDAX in the U.S., is licensed to engage in money transmission in most U.S. jurisdictions. Most of Coinbase’s money transmission licenses cover US Dollar Wallets and transfers. In some states, money transmission licenses also cover digital currency wallets and transfers on the platform. In other states, no money transmission license is required to operate a digital currency business

Coinbase is also registered as a Money Services Business with FinCEN.

Coinbase is required to comply with a number of financial services and consumer protection laws, including:

The Bank Secrecy Act, which requires Coinbase to verify customer identities, maintain records of currency transactions for up to 5 years, and report certain transactions.

The USA Patriot Act, which requires Coinbase to designate a compliance officer to ensure compliance with all applicable laws, create procedures and controls to ensure compliance, conduct training, and periodically review the compliance program.

Most states’ money transmission laws and corresponding regulations.

International Currently, no license is required to operate a digital currency business in any other country where Coinbase operates.

 Here is a link with more information about your user agreement: https://www.coinbase.com/legal/user_agreement

Best,
Riley
Coinbase Support.

[bitfocus]

a good one! thanks for bringing up this one, I really love to see those guys talking about tech and crypto.