JP Morgan Chase & Co. finds itself in court facing a lawsuit that accuses the bank of usury stemming from a customer that used his credit cards to buy cryptocurrency from exchanges such as Coinbase.
Customer Files Federal Law Suit Against Morgan Chase
Fortune reports that the suit was filed on Tuesday, April 10 at the federal courthouse in Manhattan by Brady Tucker. Tucker, a Chase credit card holder from Idaho, accuses Morgan Chase of treating his purchases of cryptocurrency as cash advances starting as far back as January without any forewarning.
Cash advances carry instant charges and higher interest rates than normal purchases. Tucker who claims that he always paid his outstanding balance to the bank before the end of the billing cycle was never the less incurring interest rates of as much as 30% plus additional fees.
Seeking class-action status for the suit that asks for the return of all fees plus a million dollars in damages Tucker was quoted as saying,
“Chase silently smacked them with instant-cash-advance fees, plus much higher interest rates than normal, and left them without any recourse,”
As previously reported by NewsBTC major credit card issuers announced earlier this year it would apply cash advance fees and interest rates to purchases of cryptocurrency.
Is Cryptocurrency Cash, Property, Securities or What?
First reported on February 8 Mastercard and Visa informed customers that in addition to the normal 4% credit card fees charged for using their cards on exchanges like Coinbase there would be an additional 5% cash advance charge plus interest rates that begin at the time of purchase, not at the end of a billing cycle like a normal point of sales transaction.
This equals nearly a 10% hit right off the top of any cryptocurrency purchase made plus interest that can go as high as 30% as is the case in Mr. Tucker’s suit.
Not many traders are willing to take a 10% loss off the top but for the moment there aren’t that many alternatives for purchasing cryptocurrencies.
Brady Tucker’s lawsuit reignites the question of how cryptocurrencies are to be classified. The IRS has maintained that Bitcoin and it’s ilk are taxable property not currency. While the various US regulatory bodies are still trying to establish how to deal with digital assets.
The SEC, for instance, has been clear that they would like to see cryptocurrencies treated as securities, putting them in the same category as stocks and bonds and therefore subject to the same regulatory framework.
Representatives of JP Morgan Chase have refused to comment on the impending lawsuit.
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