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  • Writer's pictureJamal Saafir

Coinbase Wins In Supreme Court, A Literal First

As reported by Cointelegraph, on June 23rd, 2023 Coinbase, the largest United States crypto exchange, took an unprecedented victory. This was the first ever ruling on a crypto-based matter for The United States Supreme Court. Fortunately, the first ever ruling was actually in favor of crypto versus a ruling against. We’ve recently seen many days of “terror” involving the United States Securities and Exchange Commission and its pressuring of cryptocurrency related businesses and trading platforms.

The United States Supreme Court ruled in favor of Coinbase in a supporting judgment that will cease court proceedings against them in two California cases. Per the court filing, Plaintiffs in the class-action lawsuits alleged Coinbase "failed to replace funds fraudulently taken from the users’ accounts.”

Coinbase asked the district courts overseeing the cases to dismiss them on the grounds that, per the company, users signed an agreement upon creating their accounts stating that such disputes would be handled through arbitration in lieu of lawsuits.

An excerpt from a court document provided by Courthouse News:

“The sole question before this Court is whether a district court must stay its proceedings while the interlocutory appeal on arbitrability is ongoing. The answer is yes.”

COINBASE, INC. v. BIELSKI court documents

Download PDF • 158KB

A stay of proceedings is defined as:

A ruling by a court to stop or suspend a proceeding or trial temporarily or indefinitely. A court may later lift the stay and continue the proceeding. Some stays are automatic, but others are up to judicial discretion.

California district courts will now direct both cases into arbitration, which is normally less expensive for companies than resolving their matters in a court of law. The court opinion referenced the Wright and Miller Treatise which explain that a “complete stay of district-court proceedings pending appeal from a refusal to order arbitration is desirable” because “continued trial-court proceedings pending appeal could lead to an entirely wasted trial if arbitration is ordered on appeal.”

How I understand the court’s opinion: If arbitration is where the matter would end up, then arbitration is where the matter should be given focus.

In the court’s opinion, they also stated, “When creating a Coinbase account, individuals

agree to the terms in Coinbase’s User Agreement. As relevant here, the User Agreement contains an arbitration provision, which directs that disputes arising under the agreement be resolved through binding arbitration.”

After California’s district courts denied Coinbase’s request for arbitration in the previously mentioned cases, the company filed appeals seeking a stay while the appeals were addressed, but the courts were inclined to continue the civil cases despite Coinbase's appeals.

The Supreme Court’s June 23rd decision grants the stays and allows Coinbase’s appeals to go through before the class-action suits can continue. The court’s decision allows Coinbase the same legal treatment typically given to all companies under the U.S. Federal Arbitration Act of 1925.

This ruling marks the United States Supreme Court’s first cryptocurrency-related ruling. Justice Brett Kavanaugh wrote the opinion, which was supported by four of the court’s other conservative justices in a 5–4 vote.

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