They basically broke the softer harder payments rules. You can't give out harder money (cash) for softer money (check) without some additional measures. Usually it's a waiting period but here they took a risk and got caught out. They should win their suits but there's a kind of hubris behind it that shows that they don't value their customers.

OriginalSize

econ

JPMorgan begins suing customers

siggy47

Maybe. But in this case we can’t entirely blame fiat. The problem is fraud. In this case they were depositing large checks and immediately withdrawing cash before they cleared. Checks represent settled funds in another account, it’s a simple transfer, settling over time. No credit or money was created, just fungible dollars moving through the system. 

It’s analogous to replacing an unconfirmed spend or passing an already claimed Ecash voucher. If you don’t verify, (or wait in the case of mainnet), you can get burned if you redeem (eg: settle in LN sats). We may see “infinite sat glitches” as people find fraudulent ways to claim unsettled Bitcoin from the system(s) in the future too.