- The ruling allows the exchange to pursue arbitration for two separate class action lawsuits.
- The exchange’s legal victory is not about cryptocurrency.
On Friday, the Supreme Court delivered a significant win to Coinbase when it ruled that a lawsuit filed by one of its users must be put on hold until Coinbase defends an appeal of a lower court’s decision. This is the first time a cryptocurrency company has presented its case before a US high court, and it is predicted to impact future lawsuits against crypto exchanges.
The court ruling, which passed with a 5-4 majority vote, allows the San Francisco-based crypto exchange to continue its efforts to push for arbitration in the putative class action lawsuit. However, the ruling did not touch on cryptocurrency issues.
“The only question is whether the district court must stay its pre-trial and trial proceedings while the interlocutory appeal is ongoing. The answer is yes: The district court must stay its proceeding,” wrote Justice Brett Kavanaugh on behalf of the majority.
Class Action Lawsuits
Coinbase faces two cases brought by its uses – Bielski v. Coinbase and Suski v.Coinbase. Bielski’s lawsuit alleges that the exchange did not make compensation for an amount lost to scammers. On the other hand, Suski v. Coinbase case involves a 2021’s sweepstakes event.
Coinbase earlier lost an initial ruling on the legal matter when a federal court in California allowed the class action lawsuits to proceed against the exchange’s user agreement, which states that disputes must be resolved through arbitration. In the ruling, the US District Court for the Northern District of California argued that the exchange used a ‘litigation gimmick’ to disadvantage users.
“The Court concludes for the first time that an interlocutory appeal about one matter (arbitrarily) bars the district court from proceeding on another (the merits). The logic has such significant implications for federal litigations that the majority itself shies away from Pandora’s box it may have opened,” the ruling noted.
