Supreme Court takes Coinbase crypto lawsuits appeal

The Supreme Court on Friday agreed to listen to an appeal by the foremost crypto exchange Coinbase, which is searching for to have two customer lawsuits against the corporate resolved by private arbitration, not by a federal court.

“We’re gratified the Supreme Court agreed to listen to our appeal, and we sit up for its resolution of this matter,” a Coinbase spokesperson said.

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The difficulty the high court will take up in Coinbase’s case pertains to the highly technical query of whether a celebration in a lawsuit might be forced to proceed to defend the case in proceedings in a federal district court, whilst it asks an appeals court to send the dispute to an arbitrator.

However the case is likely to be the primary taken by the Supreme Court involving a cryptocurrency company.

“It’s the primary one I’ve known of, needless to say,” said Glenn Chappell, an attorney for Abraham Bielski, one among the Coinbase customers who’s suing the corporate.

“It might thoroughly be the primary one,” he said.

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

“We do not think that firms like Coinbase needs to be entitled to an automatic stay of litigation after a district court has already determined their arbitration is illegal,” Chappell said.

But, he added, “We definitely still welcome the power to advocate on behalf of consumers within the matter.”

Bielski sued Coinbase after he was scammed out of greater than $31,000 from his account at the corporate by someone not connected to Coinbase. His would-be class motion lawsuit alleges that the Electronic Funds Transfer Act requires Coinbase to credit customer accounts for stolen cryptocurrency.

Coinbase sought to compel arbitration. But a California federal district court judge ruled that the arbitration agreement Bielski had with the corporate was not valid under that state’s law, which allowed his case to proceed in district court.

In the opposite lawsuit taken up by the high court on Friday, Coinbase customers sued the corporate in California district court claiming that Coinbase’s promotion of a Dogecoin sweepstakes in June 2021 violate state law.

As in Bielski’s case, a district judge refused Coinbase’s request to send the sweepstakes-related case to arbitration.

The U.S. Circuit Court of Appeals for the Ninth Circuit in each cases denied Coinbase’s request to place the lawsuits on hold on the district court level as the corporate pursued appeals searching for to overturn the rulings denying it arbitration.

Neal Katyal, an attorney representing Coinbase on the Supreme Court, in his petition asking the justices to listen to the corporate’s appeal said that there’s a deep split amongst lower federal appeals courts on the query the court will resolve.

Six federal appeals circuits have held that an appeal of a denial of a motion to compel arbitration “robotically” stays proceeding in a district court, Katyal wrote.

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

“Coinbase must now devote significant time, energy, and resources to burdensome putative class actions in two District Courts despite the fact that the Ninth Circuit is prone to conclude that neither case belongs in federal court to start with,” Katyal wrote.