US Supreme court set to hear its first cryptocurrency case – Coinbase vs. Bielski
The U.S. Supreme court is set to hear its first cryptocurrency-related case — a lawsuit against crypto exchange Coinbase — on March 21.
The case is expected to define whether certain types of cases involving users of crypto platforms can be sent to arbitration or not.
Bielski vs. Coinbase
The case involves a private citizen — Abraham Bielski — who sued Coinbase in August 2022 after he lost his holdings on the platform to a scammer. He alleges in the court filing that Coinbase failed to protect his assets against theft and is looking for re-compensation to the tune of $31,000.
However, Coinbase argues that the case belongs in arbitration as it cannot stop users from sharing their personal information with scammers. The exchange’s arbitration appeal was previously denied by lower circuit courts.
Nine judges are set to hear both sides’ arguments and determine whether such cases deserve full trials instead of arbitration outside court.
The verdict could potentially affect another case involving Coinbase.
Suski vs. Coinbase
David Suski filed a lawsuit against Coinbase over a sweepstakes promotion that they claim was misleading.
The case involves three other plaintiffs — Jonas Calsbeek, Thomas Maher and Jaimee Martin — who allege that they traded $100 worth of Dogecoin (DOGE) on Coinbase based on advertising for sweepstakes.
According to the filing the advertising read:
“Trade DOGE. Win DOGE. Starting today, you can trade, send, and receive Dogecoin on Coinbase.com and with the Coinbase Android and iOS apps. To celebrate, we’re giving away $1.2 million in Dogecoin. Opt in and then buy or sell $100 in DOGE on Coinbase by 6/10/2021 for your chance to win. Terms and conditions apply.”
However, only people who had not traded DOGE were considered eligible for the draw and the plaintiffs claim this was not clear in the original promotion, which suggested otherwise.
Coinbase arbitration appeal
Coinbase argues that crypto exchanges should fall under the same legal umbrella as other retail businesses and such disputes should be resolved in arbitration.
According to the exchange, court proceedings in such cases should stop when a party files a “non-frivolous” appeal to compel arbitration.
Retail businesses often rely on arbitration to resolve many cases involving consumers and historically, such disputes with crypto-related companies have mostly been resolved outside court.
However, lower courts have denied the exchange’s previous attempts to compel arbitration in both cases.
In the Suski vs. Coinbase case, the judge determined that plaintiffs had provided sufficient evidence to back their claims.