Coinbase is a cryptocurrency exchange based in the USA that is currently celebrating a favoring decision made by the Supreme Court of the USA. As per media reports, US Supreme Court has accepted Coinbase Global Inc’s plea to postpone customer lawsuits and settle their disputes out of court.
At the same time, the company will now be able to pursue hearings in arbitration rather than litigation. Coinbase officials have regarded it as a big success for the firm.
It is worth noting that commercial enterprises often favor the arbitration process of case procession since its private, cheaper, and faster in comparison to litigation. The decision to rule in favor of Coinbase had a 5-4 majority. This decision has also overturned a case where a customer of a crypto exchange was suing for damages sustained during a scam.
The lower court opted for a class action lawsuit. However, Coinbase was aiming for an appeal to move the case into arbitration. Meanwhile, Supreme Court also dismissed a second case that Coinbase applied for its review.
Coinbase’s Cases will be Tried Under the Federal Arbitration Act
Coinbase presented its case for arbitration by appealing the Federal Arbitration Act in a court of law. At the same time, Coinbase lawyers maintained in the court that the terms of services offered to the account holders state that all the disputes are going to be handled in arbitration. It means that all proceedings in a trial court cannot continue whenever Coinbase submits a request to compel arbitration.
Justice Brett Kavanaugh added his remarks to the ruling as well. Until the court has ruled on all the appeals of Coinbase all the consumer cases are to be halted that are underway in the litigation courts.
The statement reads that trial court proceedings are not encouraged in cases where arbitration is pending until an appeal is made. He maintained that under these circumstances the company can lose all benefits of arbitration such as lesser lawsuit costs and time.
Furthermore, the judge maintained that in such a case when after an appeal the firm has won the arbitration appeal it may still effectively lose the benefits of an arbitration clause in its customer service contract.
Katherine Minarik is the VP of litigation-related matters at Coinbase. She maintained that in the cases where lawsuits can be settled in arbitration both the customer and the companies suffer.
She maintained that rather than going for the lengthy and expensive processing method of litigation arbitration is a better option. She also claimed that lower court litigation is now going to be put on halt until the court has issued a ruling on whether this case belongs in the court at all.
The ruling has an impact on one of the cases such as Bielski versus Coinbase. Bielski a former Coinbase customer has sued the company for damages after losing $30k to a crypto scammer. He maintained that Coinbase violated the Electronic Funds Transfer Act by refraining from investigating or redirecting his account.
Meanwhile, there are some other consumer cases where Coinbase faces charges of violating false advertisement laws of California by offering sweepstakes in 2021 with Doge as a reward. In both cases, federal judges repel the request of Coinbase to treat the case in arbitration and Coinbase appealed those decisions in the Supreme Court.