Supreme Court Takes Appeal From Coinbase Crypto Lawsuits

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On Friday, the Supreme Court agreed to hear an appeal from major crypto exchange Coinbase, which is seeking to have two customer lawsuits against the company resolved through private arbitration, not federal court.

“We are delighted that the Supreme Court has agreed to hear our appeal, and we look forward to the resolution of this case,” a Coinbase spokesperson said.

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The issue the high court will address in the Coinbase case concerns the highly technical question of whether a party to a lawsuit can be compelled to continue to defend the case in federal district court, even if they ask a court to call to send the dispute to an arbitrator.

But the case could be the first taken by the Supreme Court involving a cryptocurrency company.

“It’s the first one I know of, for sure,” said Glenn Chappell, attorney for Abraham Bielski, one of the Coinbase clients suing the company.

“It could very well be the first,” he said.

People watch the logo of Coinbase Global Inc, the largest U.S. cryptocurrency exchange, display on the Nasdaq MarketSite jumbotron in Times Square in New York, April 14, 2021.

Shannon Stapleton | Reuters

He and Bielski’s other attorneys had opposed Coinbase’s request to take the case to the Supreme Court.

“We don’t think companies like Coinbase should be entitled to an automatic stay of litigation after a district court has already determined that their arbitration is unlawful,” Chappell said.

But, he added, “We always welcome the opportunity to advocate on behalf of consumers in this matter.”

Bielski sued Coinbase after he was scammed out of over $31,000 into his account with the company by someone not connected to Coinbase. Its potential class action lawsuit alleges that the Electronic Funds Transfer Act requires Coinbase to credit customer accounts for stolen cryptocurrency.

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Coinbase sought to impose arbitration. But a federal district court judge in California ruled that the arbitration agreement Bielski entered into with the company was not valid under that state’s law, allowing his case to proceed. in the district court.

In the other lawsuit filed by the High Court on Friday, Coinbase customers sued the company in California District Court, claiming that Coinbase’s promotion of a Dogecoin contest in June 2021 violated US law. State.

As in Bielski’s case, a district judge denied Coinbase’s request to send the contest-related matter to arbitration.

In both cases, the U.S. Circuit Court of Appeals for the Ninth Circuit denied Coinbase’s request to stay lawsuits at the district court level as the company pursues appeals seeking to overturn awards denying it arbitration. .

Neal Katyal, an attorney representing Coinbase in the Supreme Court, in his motion asking the justices to hear the company’s appeal, said there is a deep split between the lower federal appeals courts on the issue that the court will decide.

Six federal appellate circuits have ruled that an appeal from a denial of a motion to “automatically” compel arbitration remains pending in district court, Katyal wrote.

But, “Three circuits … held the opposite,” he added. “The circuits will remain divided unless this Court intervenes.”

“Coinbase must now devote significant time, energy and resources to binding putative class action lawsuits in two district courts, even though the Ninth Circuit is likely to find that neither case is right for federal court to begin with. “, wrote Katyal.

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