Bitcoin-To-Gold Seller Coinabul.Com accused of Fraud

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Reeds Jewelers Store and Online Store Accepts Bitcoin Now
Reeds Jewelers Store and Online Store Accepts Bitcoin Now

Reeds Jewelers Store and Online Store Accepts Bitcoin Now

When almost a year ago some users in /r/Bitcoin complained about the way Coinabul.com was operating, not many had thought that it would be a one of a sort case. However, now from a federal class action, it is emerging that the website that made millions of dollars by offering to sell gold for Bitcoins but failing to ship the gold.

The federal class action by Yazan Hussein is against Coinabul and its CEO Jason Shore. Filed on July 25th, the lawsuit says that defendants run an online marketplace called ‘Coinabul’ where consumers may exchange ‘Bitcoins,’ a new form of digital currency for physical denominations of silver or gold; however, they failed to fulfill the contract.

The Lawsuit Could Cause Serious Trouble for Coinabul

The lawsuit further says that, however, unfortunately, rather than delivering the metals promised to their customers, defendants chose to capitalize on the lack of effective regulatory oversight in this burgeoning industry, and instead defrauded their customers out of millions of dollars worth of Bitcoins.

This could be a serious trouble for Coinabul.com if there is any foundation to the claim. Customers as well as the authorities are aware of the consequences of failure of Bitcoin exchange Mt. Gox earlier this year and they won’t want to happen anything like that. Thousands of customers lost their investment when Mt. Gox failed to pay them back.

A major concern for the complainant is that though Coinabul claims says it is Wyoming LLC, allegedly based in Cheyenne, it actually is operated from California and that too without being registered to do business there. The lawsuit reveals that the CEO of the company Jason Shore lives in California.

Coinabul Stopped Honoring Its Sales for More Than a Year Says the Lawsuit

The complainant says that Coinabul stopped honoring its sales in June 2013; however, continued accepting Bitcoins despite the fact that it had no metal in its inventory, until April 2014. In the lawsuit he says that though he transferred 1,644.54 Bitcoins to Coinabul last year and expecting timely response, he did not receive the gold he had ordered.

According to Yazan Hussein even after he provided the company with his personal information, including his Social Security number, which Coinabul claimed it needed to comply with money laundering laws, the company could not fulfill the promise. Now, he seeks class certification, restitution, rescission, damages for fraud and breach of contract.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com