- Lawyers for San Francisco-based Coinbase attempting to convince nine justices to suspend two class-action lawsuits against the cryptocurrency exchange.
- The court will hear a procedural argument over whether the lawsuits should be heard in federal court or sent to arbitration, which Coinbase’s user agreement stipulates.
On Tuesday, the U.S. Supreme Court will hear arguments in its first-ever crypto-related case, with lawyers for San Francisco-based Coinbase attempting to convince nine justices to suspend two class-action lawsuits against the cryptocurrency exchange. Although this case deals with cryptocurrencies, it is not a crypto-specific dispute; instead, the court is hearing a procedural argument over whether the lawsuits should be heard in federal court or sent to arbitration, which Coinbase’s user agreement stipulates. The appeals court decision that allowed the two cases of Bielski v. Coinbase and Suski v. Coinbase to proceed conflicts with Coinbase’s arbitration requirement, which can often put consumers at an unfair disadvantage.
The U.S. District Court for the Northern District of California denied Coinbase’s motion to compel arbitration in the Bielski case last April, citing its arbitration clause as “unconscionable” and an attempt to disadvantage users in the event of a dispute. This ruling was then upheld by the 9th U.S. Circuit Court of Appeals in San Francisco when Coinbase appealed the decision in July. As a result, Coinbase has become a frequent target of class-action lawsuits, with some dismissed and others allowed to proceed. These suits have included allegations that the exchange sold unregistered securities after the SEC deemed certain tokens to be securities and claims that it mishandled its public listing.
Coinbase has been hit with many lawsuits stemming from allegations of hacks and inadequate security. One such suit is Bielski’s case, which accuses the exchange of violating its legal obligations when it failed to reimburse him for $31,000 lost in a scammer-orchestrated fraud. The Supreme Court will also be reviewing Suski v. Coinbase, a dispute over Coinbase’s June 2021 ‘million-dollar sweepstakes’ event. Suski and other customers argue they were misled by advertising that indicated they needed to buy or sell $100 in dogecoin to enter the draw when users who didn’t trade dogecoin were also eligible.
With more legal claims being filed against Coinbase, the exchange is increasingly desperate to find a resolution. If its petition to the Supreme Court is successful, future suits may be forced into arbitration – making it easier for Coinbase to manage them.
On Tuesday, the court in Washington, D.C., will hear oral arguments for a case that could significantly impact the emerging litigation landscape in the crypto sphere and beyond. The case is second on the docket and scheduled to begin at 10:00 a.m. ET is expected to last 60 minutes, and its eventual decision could have wide-ranging implications for other crypto companies that have faced class-action lawsuits. Though the decision will not set a precedent for crypto’s most critical issues, it could still be highly influential to the industry.