DLA Piper achieves appellate victory for cryptocurrency exchange Coinbase in lawsuit over Bitcoin Gold

DLA Piper won a significant appellate victory on behalf of global cryptocurrency exchange Coinbase, defeating a lawsuit alleging that the exchange violated various obligations to users when it refused to support or provide access to the forked cryptocurrency Bitcoin Gold.

Plaintiff Darrell Archer is a Coinbase customer and had certain amounts of Bitcoin held in custody by Coinbase. On October 24, 2017, third parties created Bitcoin Gold, a hard fork off of the Bitcoin blockchain. For various reasons — most notably concerns over the new currency’s security and reliability — Coinbase declined to develop the technological support allowing access to and trading of Bitcoin Gold. Prior to the fork, Coinbase notified its customers that it presently would not support Bitcoin Gold. Months later, the Bitcoin Gold network was hacked, resulting in the loss of millions of dollars from exchanges that chose to support the fork. In response, Archer sued Coinbase in San Francisco Superior Court, asserting claims for breach of contract, conversion and negligence.

In late 2019, the trial court granted summary judgment for Coinbase, and on August 10, 2020, the California Court of Appeal for the First District affirmed, holding that Coinbase's user agreement contained no obligation for Coinbase to provide services for or access to Bitcoin Gold.

The decision represents a significant victory for Coinbase and other cryptocurrency businesses, which typically provide access only to certain, select digital currencies that meet stringent requirements of security, reliability and liquidity.

The DLA Piper team representing Coinbase in the appeal included partner Matthew Miller, of counsel Michael Fluhr, and associates Mandy Chan and Mustafa Moiz (all of San Francisco).