Coinbase Suit has finally won the Crypto debate to U.S. Supreme Court

June 26, 2023: On Friday, Coinbase’s Suit Finally won the Crypto Debate to U.S. Supreme Court to terminate consumer cases. Similarly, it pursues appeals to force arguments out of courts and into private Arbitration, which businesses often prefer over litigation.

In a 5-4 conclusion, the justices changed a lower court’s ruling involving a user who sued after a scammer stole money from his account. The lower court had let a proposed class action lawsuit proceed while Coinbase pressed its appeal, contending that the claims belong in Arbitration. The justices dismissed a second case that Coinbase had asked it to review.

Businesses generally prefer to arbitrate claims because the process is cheaper and faster than litigation in court, which can be harder to fight and carries a huge risk of hefty damages awards.

Coinbase’s exchange allows users to transact in digital currencies like Bitcoin and ether. The company claims that its user agreement requires disputes to be resolved through Arbitration. Under the Federal Arbitration Act, which governs dispute resolution proceedings through Arbitration, action in practice courts must halt when a denial of a request to compel Arbitration is appealed.

Conservative Justice Brett Kavanaugh, joined by four fellow conservatives, wrote the ruling.

Kavanaugh cautioned regarding the risk of allowing trial courts to proceed. At the same time, the arbitration question plays out on appeal, saying such a scenario could cause the benefits of Arbitration, such as efficiency and cost protection, to be “irretrievably lost – even if the court of appeals later figured that the case had belonged in arbitration all along.”

The court’s three liberal justices and conservative Justice Clarence Thomas dissented.

One of the cases concerns a California lawsuit by customer Abraham Bielski, who alleged that a scammer embezzled over $30,000 from his Coinbase account in 2021. The suit accused the group of violating the Electronic Funds Transfer Act by not investigating or recrediting Bielski’s account.