Tradehill, Inc. v. Dwolla, Inc.

Category: Mentions Bitcoin
Relevance: Not particularly relevant to cryptocurrency
Type: Court Case
Location: United States District Court, Northern District of California
Decided: May 9, 2012
Link to the order: Tradehill, Inc. v. Dwolla, Inc.

Parties

Tradehill, Inc. – One of the first bitcoin exchanges where individuals could buy the cryptocurrency.

Dwolla, Inc. – Payment processor not exclusively focused on cryptocurrency.

Dispute

In 2011, Tradehill and Dwolla entered into an agreement whereby Dwolla would handle the processing of customer purchases of Tradehill services. A dispute arose when, according to Tradehill, Dwolla did not absorb chargeback fees incurred by Tradehill customers per the 2011 agreement. Dwolla withheld $164,878.72 from Tradehill, corresponding to the reversed charges. The subject of this order was ruling on motions filed by Tradehill directed to whether an arbitration clause including in the original agreement between Tradehill and Dwolla was binding, or failing that, the case should have been dismissed for lack of personal jurisdiction.

Result

Motion to compel arbitration was granted, and motion to dismiss was deemed moot.

Tradehill’s argument was that the arbitration clause was not binding because the clause was unconscionable, required the parties to split fees, and that Dwolla waived their right to rely on the arbitration clause. The court did not find this argument persuasive. Accordingly, the motion was denied, which meant that arbitration had to proceed, and the motion to dismiss was deemed moot.

Relevance to Cryptocurrency

This case involves one of the earliest cryptocurrency exchanges. That exchange was focused on trading bitcoins.

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