Gatehub and BitStamp have been sued by a Canadian Bitcoin investor for $4.9 million, who alleges the companies didn’t make clear he was buying Bitcoin IOUs instead of the real thing. The allegations, made by Salim Satir in London’s High Court, center around whether or not he physically owned the ₿800 he obtained, and therefore the Bitcoin Cash tokens that resulted following the 2017 hard fork, alleging that he lost out on substantial gains because of the issue.
When Is Your Bitcoin Not Your Bitcoin? When It’s an IOU
Satir claims he held a substantial amount of XRP on Gatehub and swapped it for BTC through the platform, believing he now owned the bitcoin himself. However, what he had in fact bought were Bitcoin IOUs which would be held by BitStamp until Satir redeemed them.
Satir’s lawyers claim that the wording on the site did not make it clear that Satir was buying IOUs and not the actual bitcoin, calling the information about the mechanism “incomplete and misleading.” Satir claims that neither Gatehub nor BitStamp offered an explanation as to whether and how the IOUs were enforceable or how the deductions taken out upon redemption would impact the value of his holdings.
Satir Missed Out on Bitcoin Cash Boom
Satir also alleges that he should have had access to 872 Bitcoin Cash tokens on his Gatehub account, thanks to his Bitcoin holdings at the time of the 2017 hard fork, which saw the Bitcoin holdings credited at a 1:1 ratio. Instead, Satir claims he was blocked from doing so until January 18, 2018, at which point the value of Bitcoin Cash tokens had dropped by almost $3,000.
While there have been no legal cases relating to the ownership of Bitcoin IOUs, a French court last month ruled that a crypto exchange that borrowed ₿1,000 in 2014 was allowed to keep the 1,000 BCH tokens that derived from it. Although the two cases are different in focus and jurisdiction, it will nevertheless be interesting to see if a similar thought process is followed by the British courts.