US Supreme Court dismisses two class action lawsuits against Coinbase

1 year ago 82

Proceedings through private arbitration instead of courts

The U.S. Supreme Court dismissed two class action lawsuits against major crypto asset (virtual currency) exchange Coinbase on the 23rd.

One of the lawsuits is against former Coinbase user Abraham Bielski.

Bielski said that a fraudster stole more than $30,000 from his account in 2021, and that Coinbase did not investigate his account at the time, which violated the Electronic Funds Transfer Act. was accused of that.

A lower court (court of appeals) allowed the case to proceed, but Coinbase said the matter should be handled in private arbitration rather than in court. This time, Coinbase’s claims have been confirmed.

The other lawsuit has former Coinbase users as plaintiffs. Coinbase has been sued under California’s False Advertising Act for tricking users into paying to participate in a 2021 campaign that offers prizes in the form of the cryptocurrency Dogecoin (DOGE).

The Supreme Court also dismissed this case, stating that it should be handled by private arbitration.

Defendant companies generally prefer private arbitration because private arbitration is cheaper and faster than continuing litigation in court. In the case of litigation in court, the risk of large damages judgments also increases.

coinbase comments

Katherine Minarik, Head of Litigation at Coinbase, commented on the ruling:

Judges recognized that companies like Coinbase and their customers would suffer a lot if a lawsuit that should have been handled in private arbitration went through a lengthy and costly court process.

We are grateful to the Supreme Court for its careful review. Another example of why I believe in the American court system. The rule of law is sometime slow, and at times disappointing. https://t.co/PeItwXC32s

— paulgrewal.eth (@iampaulgrewal) June 23, 2023

Coinbase Chief Legal Officer Paul Grewal also said, “I appreciate the Supreme Court’s careful consideration.

Background of the judgment

In the latest ruling, the judges dismissed the case by a narrow margin of 5 to 4.

The court cited Coinbase’s user agreement as one of the reasons for dismissing the lawsuit. When creating an account on Coinbase, users are agreeing to the terms of the Terms.

The contract includes an arbitration clause, stating that disputes arising under the contract will be resolved through arbitration.

Also filed by the SEC

Coinbase has faced various lawsuits in the past. In February, a New York District Court dismissed a class action lawsuit filed by plaintiffs alleging that Coinbase was selling unregistered securities.

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In addition, the U.S. Securities and Exchange Commission (SEC) is currently suing Coinbase for providing unregistered securities. Coinbase is also in the process of filing a limited lawsuit against the US SEC seeking a response to its regulatory clarification petition.

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What is SEC

Established in 1934. Its purpose is to ensure fair trading and investor protection, and prevent insider trading, corporate fraudulent accounting, and market manipulation. It also determines whether virtual currency falls under the category of securities. SEC stands for “Securities and Exchange Commission”, and in Japan the “Securities and Exchanges Surveillance Commission” plays a similar role.

Cryptocurrency Glossary