I Love Bitcoin. That’s Why I Sue Exchanges

“You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes.”

– Morpheus, “The Matrix” (1999)

I grew up the son of a personal injury lawyer in New York and have been exposed to the law my entire life. I worked in Washington, D.C. for nearly 10 years at one of the largest and fanciest law firms in the country before I started my own firm. I have even represented high-profile and high-net-worth people and companies.

None of this fully prepared me for my entry into the world of digital currency. It was like Keanu Reeves entering his own digital world in “The Matrix,” and it happened at a South Beach bar in 2014.

After a few drinks, one of my friends took out his smartphone and sent me 5 BTC to impress our other friends. Much like when Neo swallowed the red pill that was offered to him, getting those bitcoin introduced me to a Wonderland in which I learn every day how much deeper the rabbit hole goes. (By the way: Thank you, unnamed friend! I have yet to move those bitcoin and have them sitting in the same wallet where you placed them almost four years ago!)

But I’m also active in the industry in another way.

In the last three years, I have filed lawsuits against CryptsyCoinbaseKrakenTezos and Monkey Capital to name a few. More lawsuits are coming in the days, weeks and months ahead. Dare I say, I have filed more litigation in this space than any other lawyer in the country. I travel the country speaking at conferences, lectures and on TV.

I have been quoted in articles published by CoinDesk, Reuters, Bloomberg and The Financial Times regarding cryptocurrency and bitcoin as an investment.

People ask me all the time: “Is bitcoin a good investment? If so, where should I buy it?”

From my unique perspective in the cryptocurrency Wonderland, I tell those people: “I have absolutely no $#@#$!% idea whether the price of bitcoin is going up or down, what alternative cryptocurrency you should buy to invest in today, or where you should buy it!”

The next question is usually: “Seriously, what should I do?” I can only laugh and think to myself: “If I knew the answer, I would invest myself.” For your information, I don’t; simply because I do not know what the price of bitcoin is going to do. If I did, I would have invested in 2014 after my friend gave me those first five bitcoin.

The exchange lie

What I do know, and what I can speak about somewhat intelligently, is the universal myth that currently exists for people who are first experiencing cryptocurrencies: that all U.S.-based crypto exchanges are the same.

This myth is the single biggest threat to any investor money in this space. KNOW. YOUR. EXCHANGE.

There is a difference between Bittrex, Poloniex, Coinbase, Kraken, Gemini and several other lesser-known exchanges. They are not the same. The prices of your crypto on the exchanges are different, the rules and regulations they follow are different, the security is different and the quality of leadership is different.

How each exchange handles challenges and adversity is different. I’m not here to endorse any of the different exchanges, but I can tell you that each one secures customer assets, handles customer issues and provides support differently. Some are akin to legitimate banks; others are more like Bernie Madoff, with the appearance of sophistication and wealth while in reality, they are just common thieves and fraudsters.

What happens when a flash crash occurs and clients lose money? What happens when that flash crash only occurs on one exchange but not others? What happens when that exchange happens to provide customers with margin trading like a traditional investment house but denies that those rules apply to them? What law applies and what government agencies have the power to enforce the theoretical laws that apply? When catastrophe strikes, what happens?

Some exchanges respond to catastrophic events by refunding their customer accounts, other exchanges tell customers they’re #@$% out of luck.

While the latter might be good for my business – because wrongfully imposed customer losses are where lawsuits are usually born – that’s not good for the consumer.

If you have ever heard me speak on this topic, you know I am a passionate believer that regulation is coming and that it’s going to come hard and fast in the U.S.

Point of failure

That day of reckoning will collapse the weaker exchanges. Which exchanges will survive? Typically, those with the best leadership and that operate with transparency will rise to the top. As for those that fail?

Good luck collecting on your losses if you had entrusted your crypto to one of those exchanges. It’s expensive, time consuming and you never know how it will turn out…

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