The US Supreme Court hears the first ever crypto case tomorrow
The US Supreme Court will hear arguments in its first ever crypto-related case on Tuesday, when lawyers for San Francisco-based crypto exchange Coinbase will try to convince the nine justices to pause a pair of class-action lawsuits against the exchange.
Although the case that the Supreme Court will hear on Tuesday involves crypto, it is not in itself a crypto case. Instead, this case is a rather esoteric, procedural argument about whether a lawsuit can continue in federal court while one party — in this case, Coinbase — tries to send the dispute to arbitration.
Coinbase is appealing an earlier ruling by a California federal court that allowed the two lawsuits, Bielski v. Coinbase and Suski v. Coinbase, to proceed, contrary to Coinbase’s user agreement, which requires disputes to be submitted to arbitration. Arbitration is an out-of-court method of dispute resolution where the odds are often unfairly stacked against consumers.
The U.S. District Court for the Northern District of California rejected Coinbase’s motion to compel arbitration in the Bielski case last April, arguing that the exchange’s arbitration clause as written is “unconscionable” and uses a “legal gimmick” to disadvantage users in the event of a dispute. When Coinbase appealed to the second highest court, the San Francisco-based 9th US Circuit Court of Appeals, in July, the decision was upheld.
Coinbase has become something of a magnet for class-action lawsuits, with judges striking down some attempts and allowing others to move forward. The cases have covered a wide range of issues, from allegations that the exchange sold unregistered securities (after the US Securities and Exchange Commission deemed certain tokens to be securities) to allegations that the exchange mishandled its public listing.
Still other lawsuits have been linked to complaints of hacks and lax security, including Bielski’s, which claimed Coinbase broke the law by failing to reimburse him for more than $31,000 he lost after being targeted by a scammer posing as a PayPal representative.
The other case the Supreme Court will consider on Tuesday, Suski v. Coinbase, concerns a million-dollar contest the exchange held in June 2021. Suski and other customers say they were misled by advertisements suggesting they had to buy or sell $100 in dogecoin for a chance to win, while users who did not trade dogecoin were also eligible.
As the lawsuits continue to mount, Coinbase has been forced to play an increasingly hectic game of legal mule. If the exchange gets the desired result from the Supreme Court, future lawsuits could be forced into arbitration – making it easier for Coinbase to handle them.
While the case will not set a precedent in either direction for the main issues facing crypto, it could have a significant impact on the emerging litigation landscape in the cryptosphere, and will have far-reaching implications for other crypto companies that have increasingly been targeted by class action lawsuits .
The court will reconvene at 10:00 a.m. ET on Tuesday, and this case is the second case to be heard tomorrow. Oral arguments are expected to last 60 minutes.
