Coinbase Wins Supreme Court Backing for Arbitration

The cryptocurrency exchange, Coinbase secured the backing of the US Supreme Court on Friday to pause a class-action lawsuit by one of its customers in order to pursue its efforts to send the case into private arbitration. Arbitration is an out-of-court dispute resolution method in which parties to a dispute agree to have their differences resolved by an impartial third party, known as an arbitrator.

Coinbase Secures Court Support

In April 2022, Abraham Bielski, a California resident, filed a class action lawsuit against Coinbase, alleging that scammers posing as PayPal representatives stole $31,000 from his crypto wallet on the exchange in 2021. Bielski claims he unsuccessfully failed to reach Coinbase for help.

In another class action lawsuit, former Coinbase users alleged that the exchange tricked them into paying for a sweepstake in 2021, thereby breaking California’s law on false advertising.

Last year, a district court in California dismissed a motion filed by Coinbase asking that litigation in the Bielski case be suspended for its appeal to take the case into arbitration in line with the dispute resolution agreement customers had signed when joining the platform. A Court of Appeal subsequently upheld the lower court’s decision.

However, the Supreme Court on Friday passed a 5-4 majority ruling, giving Coinbase the go-ahead to appeal for arbitration in the Bielski case. Arbitrations are believed to be cheaper for organizations, easier to manage and can be bad for customers when forced.

The First Crypto Case in US Supreme Court

Meanwhile, the US Supreme court dismissed an appeal to intervene in another suit involving sweepstakes, according to Reuters. As stated by the outlet, Conservative Justice Brett Kavanaugh, one of the judges that supported the ruling, noted that not backing Coinbase’s appeal could be harmful to the benefits of arbitration.

On the contrary, judges opposed to the ruling argued that permitting both a court trial and arbitration on the same case helps to ensure the interests of all parties in the case are served. The case marked the first time a crypto company could argue its case before the Supreme Court in the US. However, the case is not related to Coinbase’s crypto business.

Coinbase's legal victory at the Supreme Court comes as the largest crypto exchange in the United States battles allegations from the country's securities watchdog that it operates an illegal trading platform and offers unregistered securities. California's state regulator also recently ordered the exchange to 'desist and refrain' from offering its crypto staking programme to residents in the state, Finance Magnates reported.