US Supreme Court Takes Landmark Crypto Case With Coinbase Lawsuit Today – Here’s What You Need To Know
Today is United States Supreme Court is set to hear arguments in Coin baseits efforts to push two class-action lawsuits against it into arbitration. This is also a historic event, as it will be the first time the nine judges of this court will face a crypto-related case.
Notably, this is not a crypto issue per se. Bloomberg reported that this will be “a procedural battle for arbitration, rather than a crypto-specific case,” saying that:
“The question is whether a lawsuit can move forward in federal court while a company is pushing an appeal that would send the case to arbitration.”
This refers to the company’s user agreement which requires disputes to be submitted to arbitration. However, a federal court allowed the two current cases to proceed.
Coinbase filed a joint petition with the Supreme Court arguing that the court proceedings should be automatically stayed when a party files a non-frivolous appeal seeking to compel arbitration.
As for the two lawsuits: in one, Coinbase user Abraham Bielski claims the exchange should compensate him for the $31,000 he lost after he gave a scammer posing as a PayPal representative external access to their account in 2021.
The company’s customer service system failed to properly respond to requests for assistance, Bielski stated.
The second lawsuit alleges that Coinbase held a $1.2 million dogecoin (DOGE) raffle without adequately disclosing that participants did not have to buy or sell the coin.
User David Suski sued the stock exchange and marketing firm Marden-Kanealleging that Coinbase’s marketing for the contests misled customers into whether they could enter for free or had to buy the coin first.
Arbitration agreements are common in crypto as in any other industry with retail and large customer bases. Bloomberg Intelligence litigation analyst Elliot Stein stated that,
“Coinbase is no different than many of the other companies. […] It happens to be a crypto-related company.”
And this is no small matter either, as the decision the court reaches is likely to affect future crypto-related cases. According to the law firm Miller and Chevalier,
“The issue presented by Coinbase’s petition has broad implications for the emerging legal landscape of the cryptocurrency market. The digital asset offerings within the fintech sector such as crypto exchanges and non-fungible token (NFT) marketplaces include arbitration agreements that users must accept in order to access offerings.”
The court convenes at 10 A.M.
Meanwhile, as reported in February, the exchange succeeded in its legal battle against a lawsuit filed by a group of clients who claimed the platform facilitated the sale of unregistered securities and failed to register as a broker-dealer.
The class action was dismissed.
“Just the tip of the legal iceberg”
Given an ever-growing list of legal issues stemming from the growth of the crypto market and the string of crypto company failures, Gerard Comizio, associate director of the business law program at American University’s Washington College of Lawcommented on the Cooinabse case, telling Bloomberg that,
“It’s just the tip of the tip of the iceberg when it comes to crypto-related litigation.”
One of the most important legal issues out there is securities—that is US Securities and Exchange Commission (SEC)’s ongoing efforts to classify crypto-assets as securities. Some experts argued that the SEC could hit a roadblock before the Supreme Court.
“I think the current Supreme Court is probably in some ways eager to rein in what many industry people consider to be a very aggressive SEC,” Stein said.
One of the most famous cases in this area is SEC versus California-based startup Ripplewhere the regulator accused the company of selling unregistered tokens, XRP, without proper disclosure.
A federal judge in New York is expected to rule on the case in the first half of this year, and it is bound to affect the crypto industry at large.
Notably, there is a connection to Coinbase here as well. At the very end of 2020, it was reported that an alleged customer hit the trading giant with a class-action lawsuit, claiming it “illegally sold” him “securities” in the form of XRP tokens.
Besides the “securities issue”, there is the “commodity issue”. The US Commodity Futures Trading Commission stated that some crypto-assets such as Bitcoin (BTC) are commodities and argued that Congress should pass legislation to give it federal oversight of these coins.
And there are many other legal questions to be answered, such as how to apply federal tax, money laundering and antitrust laws to the industry, which are complicated by the decentralized nature of blockchains.
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Learn more:
– Legal Woes: Coinbase Faces New Class Actions, IRS Allowed to Investigate SFOX’s Customers, Another Objection in SEC-Ripple War
– Coinbase Sued Over Collapsed Stablecoin, But It’s Not UST (Yet)
– XRP Price Prediction As Judge Tries To Ban Prominent XRP Lawyers In Court – What’s Happening?
– XRP Price Prediction as Ripple CEO Confirms Exposure to Silicon Valley Bank – What Does This Mean for XRP?
– Different categories of cryptocurrencies
– The difference between Bitcoin and traditional currencies
