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U.S. Supreme Court Deliberates on Coinbase Arbitration Dispute

The U.S. Supreme Court is scheduled to hear an appeal from Coinbase Global Inc on Tuesday, requesting to stop customer lawsuits, including that of an user who was defrauded of his funds. The exchange is arguing to move the legal disputes out of court and into private arbitration. 

The Stance of Coinbase

The Supreme Court justices are set to listen to the arguments in Coinbase’s appeal of the lower court rulings allowing the proposed class-action lawsuits to continue. Coinbase’s exchange facilitates transactions with digital currencies such as Bitcoin and Ether. The company asserts, in accordance with the Federal Arbitration Act, that its user agreement requires disputes to be resolved through arbitration. 

About the Lawsuit

Abraham Bielski, a customer of California, has filed a lawsuit against Coinbase, alleging a scammer stole more than $30,000 from his Coinbase account in 2021, and that the company violated the Electronic Funds Transfer Act by not investigating the incident or crediting Bielski’s account.  Furthermore, some former users of the company have also filed a suit alleging that they were misled into paying to participate in 2021 sweepstakes that promised rewards in the form of dogecoin, a type of cryptocurrency. This action is said to be in violation of California’s false advertising laws.

Coinbase petitioned the Supreme Court, prompting a trial judge to stop the proceedings in the sweepstakes case until the end of March. Coinbase argued that going forward in court when it had the potential to resolve the claims through arbitration would defeat the purpose of the arbitration. However, Coinbase’s request to put the litigation on further hold was denied.