Coinbase has been granted permission by the US Supreme Court to halt customer lawsuits while it seeks appeals to have the cases arbitrated privately instead of in court. In a case where a user sued after being the victim of a fraud that resulted in the loss of money from their account, five of the nine Justices ruled in favor of Coinbase’s motion on Friday, reversing a prior decision by a lower court.
In response to an exchange putative class action lawsuit, Coinbase seeks to enforce arbitration. Although the decision favors Coinbase, it only has an influence on this particular issue and has no bearing on the whole bitcoin market. The fact that it is the first time a cryptocurrency corporation has made arguments before the US Supreme Court makes it notable, and it may serve as a model for further litigation involving Coinbase.
Due of its lower costs and quicker decision times, arbitration is frequently preferred by corporations over litigation. Arbitration also reduces the possibility of substantial losses. After Friday’s decision, Coinbase may go on with its attempts to force arbitration.
“We anticipate that the Ninth Circuit here, as we anticipate in [appeals] more generally, will proceed with appropriate elan when considering Coinbase’s interlocutory appeal from the denial of the motion to compel arbitration,” the decision said. We overturn the Court of Appeals’ decision and send the matter back for further actions that are in line with this ruling.
One of the lawsuits against Coinbase that was rejected was made by Californian client Abraham Bielski, who claimed that a fraudster had taken over $30,000 from his account the previous year. According to Bielski, Coinbase violated the Electronic Funds Transfer Act by failing to look into the matter or return the money. In the second dismissed lawsuit, former users claimed Coinbase engaged in misleading business practices in connection with a 2021 competition that offered dogecoin rewards, claiming a breach of California’s false advertising statute. In both cases, Coinbase appealed prior lower court judgments that had rejected the company’s justification for having the disputes arbitrated.
Following previous disputes with US authorities, particularly the US Securities and Exchange Commission (SEC), Coinbase has received a positive decision. The SEC filed a lawsuit against Coinbase, stating that the firm used its platform for trading crypto assets as a national securities exchange and broker without being authorized to do so. In addition, 11 US states issued Show Cause orders to Coinbase in response to the SEC action, forcing the exchange to justify its continued existence in those areas.
