Earlier today, news emerged that the United States Supreme Court would hear an appeal from Coinbase, a major cryptocurrency exchange. Two customers have filed complaints against Coinbase but the exchange prefers settlement via private arbitration.
Supreme Court of the United States reviews appeal of Coinbase
In a case that might strengthen companies’ capacity to arbitrate customer and employee problems, the Supreme Court of the United States has agreed to hear an appeal filed by Coinbase Global Inc. in response to a user lawsuit. According to the crypto exchange website, this appeal raises a procedural problem that can have a significant impact on the outcome of the arbitration. Abraham Bielski claims that Coinbase is responsible for the $31,000 that he lost to a scammer after providing the latter with remote access to his account.
While Coinbase challenges a lower court’s decision not to require users to arbitrate their claims, the Supreme Court has decided to review whether two planned class actions by Coinbase consumers can proceed. Coinbase’s attorney, Neal Katyal, issued a statement saying, “We are thrilled that the Supreme Court consented to examine our appeal, and we eagerly await its ruling on this case.”
Any agreement between a customer and a business that requires the customer to submit any legal claims against the business to private arbitration must be honored under the Federal Arbitration Act. According to business advocacy groups, arbitration is a more efficient and timely substitute for the court system.
Clients sues Coinbase
Coinbase users have sued the company in California district court, accusing it of breaking the law by advertising a Dogecoin sweepstakes in June 2021.2 The case was considered by the Supreme Court on Friday. Just like in the Bielski case, a District Judge ruled against Coinbase and their attempt to have the disagreement over the contest heard in arbitration.
The Ninth U.S. Circuit Court of Appeals rejected Coinbase’s appeals in both cases, which sought to stay the district court proceedings until the outcome of the appeals of the rulings that had barred arbitration. Neal Katyal, an attorney representing Coinbase before the Supreme Court, argued that the justices should consider the company’s appeal because there is “clear judicial disagreement” on the matter.
Katyal claimed that the stay of a district court proceeding is “automatically” triggered by an appeal of the court’s rejection of a motion to compel arbitration, as held by six federal appeals circuits. On the other hand, “three circuits… have held the contrary,” he said. The circuits will continue to be at odds unless this Court steps in.
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