Coinbase's First Crypto Lawsuit Goes Before the Supreme Court

In recent years, various federal agencies have focused their attention on cryptocurrencies and cryptocurrency exchanges. the Department of Justice, the Securities and Exchange Commission, and the U.S. Senate—Numerous governmental organizations and parliamentarians have started to comment on the blockchain industry. Currently, the Supreme Court is taking a position for the first time.

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Most significant U.S. On Tuesday, the court will hear arguments in the first case involving cryptocurrency. The classification, legitimacy, or regulation of cryptocurrencies are not directly addressed in the Coinbase v. Bielski case. Instead, the Supreme Court will rule on whether Coinbase, Inc., the company that runs the second-largest cryptocurrency exchange, has the right to compel arbitration in two separate consumer class action cases while postponing other legal actions.

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Although this court case is not the most interesting or complex, it may have significant effects on how crypto firms handle customer complaints going forward. The Supreme Court will undoubtedly hear a number of cryptocurrency-related cases in the years to come, including the crucial one of how to categorize and regulate cryptocurrencies. According to business professor of law at American University Gerard Comizio, "it's only the tip of the ocean on crypto-related lawsuits."

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One case that is currently proceeding in federal court in New York, between the SEC and the cryptocurrency corporation Ripple, may go to appeals and ultimately the Supreme Court. Another cryptocurrency business, Grayscale Investments, has also stated it is willing to appeal its current case to the Supreme Court, according to Trade Algo.

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What Exactly Concerns Coinbase v. Bielski, though?

The hearing on Tuesday is about forced arbitration. Two distinct consumer cases are being fought by Coinbase, and the corporation has argued that neither should be allowed to proceed to trial. The crypto exchange prefers to refer them to arbitration and halt all ongoing legal actions in the interim.

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A different method of resolving disputes outside of the judicial process is arbitration. It is frequently desired by businesses and included as a requirement in contracts with clients and employees (i.e., "any dispute...will be resolved by binding arbitration"). In actuality, it tends to favor businesses, eliminates the possibility of class actions by atomizing harmed parties into single complainants, and conducts processes behind closed doors, obviating the more open and transparent record of a court case.

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Like many businesses, Coinbase's user agreement contains an arbitration clause. Although lower courts in California have determined that Coinbase's arbitration clause is "unconscionable" and employs a "litigation gimmick" to benefit the corporation over its clients, two class action lawsuits against the cryptocurrency exchange have made it this far.

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Forced arbitration is not favored by proponents of consumer and worker rights, many democratic legislatures, or the Supreme Court historically. Overall, SCOTUSblog's analysis predicts that the conservative, present bench will support Coinbase.

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Why Do Coinbase Clients First File Lawsuits?

Abraham Bielski, the plaintiff in the first of the class action lawsuits at the center of the Supreme Court case, contends that Coinbase should reimburse him for money he lost to a cryptocurrency scammer. Bielski claims that he lost $31,000 as a result of falling for a ruse in which a PayPal agent was impersonated.

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Suski v. Coinbase, the second class action lawsuit, concerns a sweepstakes event that the main plaintiff as well as other customers say was deceptive. Some clients claim they were misinformed that they needed to exchange $100 in dogecoin in order to participate in the "million-dollar" event. Nonetheless, it appears that anyone could enter, regardless of dogecoin sales or purchases.

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There have been more and more customer lawsuits against Coinbase. Several of those legal troubles may almost vanish into the abyss of corporate arbitration if the Supreme Court ultimately rules in the company's favor, as is predicted.