Catch Me If You Can: Resolving Bitcoin Disputes with Class Actions

• Author: MaryGrace Johnstone
• Pages: 45-73

45

Catch Me if You Can: Resolving Bitcoin Disputes with

Class Actions

MaryGrace Johnstone

: In the last decade, a new kind of f‌inancial technology or “f‌intech”

has emerged, bringing with it a host of legal issues. The most commonly

known cryptocurrency, Bitcoin, is touted as the alternative to traditional

money systems. Dozens of exchanges have emerged that can be used to

store and transfer Bitcoins between virtual wallets. These exchanges are

prone to being hacked, however, and without the infrastructure to back

the “currency,” users have frequently lost Bitcoins to virtual thieves and

been unable to recover their losses. This paper argues that class actions

are an ef‌fective avenue for remedy against an exchange that has negli-

gently lost Bitcoins. It provides a brief overview of Bitcoin’s underlying

technology, the blockchain on which transactions are recorded, and

the exchanges out of which they operate. Canadian class actions law is

examined in the context of Bitcoin hacks to demonstrate how large-scale

litigation can play an increasing role in f‌intech. There are many exam-

ples of cyber attack theft where class actions are the only viable remedy,

given the commonality of harm, enormous aggregate losses, and lack of

other recourse in an unregulated and uninsured industry. There are also

inherent enforcement challenges that need to be addressed by regulators,

such as jurisdiction conf‌lict and party anonymity. New technology is con-

stantly emerging and dicult to legally classify. Nevertheless, the paper

concludes that class actions law is the best means of protecting consumer

interests against f‌intech risks and supporting the objectives of access to

justice, judicial economy, and behaviour modif‌ication.

CCAR 15-1.indb 45 8/6/2019 4:33:27 PM

CCAR 15-1.indb 46 8/6/2019 4:33:27 PM