In a landmark decision on June 23, the United States Supreme Court ruled in favor of cryptocurrency exchange Coinbase, bringing a halt to ongoing court proceedings in two class-action lawsuits in California.
The lawsuits alleged that Coinbase had failed to provide appropriate remedies to users who suffered financial losses and accused the company of engaging in deceptive advertising practices.
Coinbase argued before the district courts overseeing the cases that users had agreed to resolve any disputes through arbitration rather than pursuing legal action, as stipulated in the account creation agreement.
According to a court document shared by Courthouse News:
“The sole question at hand is whether the district court must pause pre-trial and trial proceedings during the ongoing interlocutory appeal. The answer is yes: The district court is required to stay its proceedings.”
This ruling represents the first cryptocurrency-related decision by the US Supreme Court. Justice Brett Kavanaugh authored the opinion, which received support from four other conservative justices in a 5-4 vote, according to Cointelegraph.
In a significant development, both class-action lawsuits against cryptocurrency exchange Coinbase will now be transferred to arbitration in California district courts. This outcome, which is generally more cost-effective for companies, marks a victory for Coinbase but could also have broader implications for the crypto industry.
The court emphasized that individuals who create Coinbase accounts are bound by the terms outlined in the company’s User Agreement, which includes a provision for arbitration as the preferred method for resolving disputes arising from the agreement.
Coinbase initially requested arbitration in the cases, but the California district courts rejected the request, opting to proceed with the civil suits despite the company’s appeals.
The recent decision by the Supreme Court on June 23 grants the requested stays and allows Coinbase’s appeals to proceed before the class-action lawsuits can resume.
The court’s ruling affirms Coinbase’s entitlement to the same legal treatment granted to all companies under the U.S. Federal Arbitration Act of 1925.
The impact of this decision on similar cases involving other cryptocurrency firms remains uncertain, and it does not appear to directly affect the ongoing action by the Securities and Exchange Commission (SEC) against Coinbase.
The crypto industry is closely monitoring the situation for potential implications beyond this specific case.
Nevertheless, it is important to note that the Supreme Court’s ruling, which essentially reinforces the notion that established laws can be effectively applied to cases within the cryptocurrency industry.