the supreme court on Friday agreed to hear an appeal from the major crypto exchange coin baseWhat are you looking to have? two client suits against the company resolved by private arbitration, not by a federal court.
“We are satisfied Supreme Court agreed to hear our appeal, and we hope that this matter will be resolved,” coin base said the spokesman.
The issue to be addressed by the high court in the Coinbase case relates to the highly technical question of whether a party to a lawsuit can be compelled to continue to defend the case in proceedings in federal district court, even by asking an appeals court referring the dispute to an arbitrator.
But the case could be the first ever taken by the Supreme Court involving a cryptocurrency company.
“It’s the first one I’ve seen, for sure,” said Glenn Chappell, a lawyer for Abraham Bielsky, one of Coinbase’s clients who is suing the company.
“It’s quite possible that it’s the first,” he said.
People watch as the logo of Coinbase Global Inc, the largest US cryptocurrency exchange, is displayed at the Nasdaq MarketSite jumbotron in Times Square in New York on April 14, 2021.
Shannon Stapleton | Reuters
He and Bielski’s other lawyers had opposed Coinbase’s request that the Supreme Court take up the case.
“We do not believe that companies like Coinbase should be entitled to an automatic stay of litigation after a district court has already determined that their arbitration is illegal,” Chappell said.
But, he added, “we definitely still appreciate the ability to advocate on behalf of consumers in this matter.”
Bielski sued Coinbase after someone not connected to Coinbase scammed him out of more than $31,000 from his account with the company. His potential class action lawsuit alleges that the Electronic Funds Transfer Act requires Coinbase to credit stolen cryptocurrency to customer accounts.
Coinbase sought to compel arbitration. But a California federal district court judge ruled that Bielski’s arbitration agreement with the company was invalid under California law, allowing his case to proceed in district court.
In the other lawsuit launched by the high court on Friday, Coinbase customers sued the company in California district court alleging that Coinbase’s promotion of a June 2021 Dogecoin giveaway violates state law.
Similar to the Bielski case, a district judge denied Coinbase’s request to send the giveaway-related case to arbitration.
The US Court of Appeals for the Ninth Circuit in both cases denied Coinbase’s request to stay the lawsuits at the district court level while the company filed appeals seeking to vacate the rulings denying it arbitration.
Neal Katyal, a lawyer representing Coinbase in the Supreme Court, in Your request Asking judges to hear the company’s appeal, he said there is a deep division among lower federal appeals courts on the issue the court will decide.
Six federal appeals circuits have held that an appeal of a denial of a motion to compel arbitration is “automatically” stayed in district court, Katyal wrote.
But, “Three circuits … have held otherwise,” he added. “The circuits will remain divided unless this Court intervenes.”
“Coinbase must now devote a significant amount of time, energy, and resources to onerous putative class action lawsuits in two district courts, though the Ninth Circuit is likely to conclude that neither case belongs in federal court to begin with,” he wrote. Katyal.
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