Buying Crypto on Credit is Not Necessarily a Cash Advance

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Southern District of New York Judge Katherine Polk Failla has ruled that purchasing cryptocurrency with a Chase Bank credit card does not necessarily count as a cash advance, as per Chase’s contract.

According to an opinion and order document dated August 1, Judge Failla has denied Chase’s motion to dismiss a number of the plaintiff’s complaints, which center on the bank charging a user cash advance fees for buying cryptocurrency with a Chase credit card.

The plaintiffs are Brady Tucker, Ryan Hilton, and Stanton Smith, who have brought a class action suit against the banking giant Chase.

In the document, Failla summarized their class action suit as follows:

“This claim — indeed, the entirety of Plaintiffs’ suit — is built on an argument that acquisitions of cryptocurrency could not be classified as cash advances within the meaning of the Contracts. […] Chase disagrees, claiming that cryptocurrency acquisitions are ‘cash-like transactions’ pursuant to the Contracts, and thus cash advances. The parties’ dispute thus boils down to a difference of opinion concerning the proper interpretation of the term ‘cash-like transaction.’” 

The reason that a number of Chase’s dismissal motions have not gone through is because Judge Failla believes that the plaintiffs have provided a reasonable interpretation of the term “cash-like transaction” in the context of Chase’s contract. 

As Failla also explains in the document, the plaintiffs are interpreting the word cash as referring only to fiat money, and cash-like as referring only to legally-recognized claims on cash — such as checks, money orders, and wire transfers, and notably not cryptocurrency. The defendants, on the other hand, believe that the term cash-like transactions applies to any means of payment, cryptocurrency-based or otherwise.

Notably, Judge Failla has not sided with the plaintiffs and said that their interpretation is correct. Rather, Failla has simply noted that their interpretation is plausible enough for them to proceed with their class action case. Failla wrote:

“At this point in the proceedings, however, it is irrelevant whether Chase’s interpretation of ‘cashlike transactions’ is more reasonable than Plaintiffs’. […] Because Plaintiffs have identified a reasonable interpretation of ‘cash-like transactions’ that would exclude purchases of cryptocurrency, the breach of contract claim survives the motion to dismiss.”

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