Coinbase’s Supreme Court win enables temporary halt of customer lawsuits, private arbitration, and sets precedent for other cases, impacting crypto industry amid SEC regulatory challenges.
The US Supreme Court has granted Coinbase’s request to temporarily halt customer lawsuits while it pursues appeals to move the disputes into private arbitration instead of court. In a ruling on Friday, five out of nine Justices supported Coinbase’s request, overturning a previous decision by a lower court involving a user who sued the company after falling victim to a scam.
Justice Brett Kavanaugh, speaking on behalf of the court, stated that the district court must suspend its proceedings during the ongoing interlocutory appeal. Coinbase had initiated this legal action in response to a putative class action lawsuit filed against the exchange.
Coinbase’s Supreme Court Victory And Implications For The Crypto Industry
Although this ruling is a victory for Coinbase, it does not have a direct impact on the cryptocurrency industry as a whole. However, it is significant because it is the first time a crypto company has argued before the US Supreme Court, potentially affecting other lawsuits involving Coinbase.
Generally, businesses opt for arbitration as it is a quicker and more cost-effective process compared to litigation. Arbitration also tends to offer a more favorable environment for resolving disputes, with less risk of substantial damage. Following the ruling, Coinbase can continue its efforts to compel arbitration.
“We anticipate that the Ninth Circuit here, as we anticipate in [appeals] more generally, will proceed with appropriate expedition when considering Coinbase’s interlocutory appeal from the denial of the motion to compel arbitration,” the court’s decision stated:
We reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
Dismissed Cases Against Coinbase: Implications Amid Regulatory Challenges
One of the lawsuits that got dismissed was filed by Abraham Bielski, a customer from California, who claimed that a scammer had stolen over $30,000 from his Coinbase account last year. Bielski alleged that Coinbase failed to investigate the incident or provide a refund, thereby violating the Electronic Funds Transfer Act.
The second dismissed case involved former users who accused Coinbase of deceiving them into paying to participate in a 2021 sweepstakes that promised dogecoin prizes. They also alleged that Coinbase violated California’s false advertising law.
In both of these cases, Coinbase appealed previous decisions made by lower courts, which had ruled against the company’s argument that the disputes should be resolved through arbitration.
This positive development for Coinbase comes at a time when the exchange has been dealing with regulatory challenges from US authorities, particularly the US Securities and Exchange Commission (SEC), in recent months.
Recently, the Securities and Exchange Commission (SEC) lodged a legal complaint against Coinbase, claiming that the cryptocurrency exchange conducted its trading platform for digital assets without proper registration as a national securities exchange and broker.
Furthermore, Coinbase received Show Cause orders from 11 US states following the SEC lawsuit. These orders require Coinbase to provide justification as to why it should not cease its operations in those states.