Coinbase, a leading cryptocurrency exchange, secured a significant win as the U.S. Supreme Court granted its request to stall customer lawsuits while it pursues appeals for private arbitration.
With a majority vote of 5-4, the Supreme Court permitted Coinbase to continue its efforts to compel arbitration in response to a class action lawsuit filed by a user who says that a scammer stole cash from his account. As a result, the case’s progress through the federal court system will be on hold temporarily.
This development, which occurred on Friday, June 23, marks the first time a crypto company has argued before the U.S. high court, potentially setting a precedent for similar cases in the future.
On March 21, Coinbase argued to the justices that when a court determines that a customer deserves to resolve a dispute in court rather than the arbitration specified in their user agreement, a company’s appeal should halt that case from moving forward through the courts until the request is granted.
Following the ruling on Friday, Coinbase can resume its efforts to compel arbitration. As Coinbase pursues private arbitration, the outcome of this case may define the future legal landscape for cryptocurrency companies facing similar legal concerns in the U.S.
Although the Supreme Court ruling explicitly addresses Coinbase’s case, it does not delve into broader cryptocurrency-related matters. Nonetheless, this milestone could have implications for other lawsuits filed against the crypto exchange.
The Coinbase Inc. vs. Bielski Case
A customer, Abraham Bielski, opened a Coinbase account in 2021, and he claimed that soon after doing so, a scammer fraudulently gained access to it and withdrew more than $30,000 from him. Upon noticing the fraudulent activity, he reported it to Coinbase, and the company ignored his complaint, which further prompted him to file a lawsuit.
After the lawsuit, Coinbase attempted to compel arbitration based on its user agreement. Unfortunately, the motion was denied because the arbitration and delegation clauses were unconscionable. Coinbase later lost an appeal that it filed to overturn the decision. Based on some aspects of the case, the lawsuit was scheduled to move forward before the Supreme Court decision.
