The U.S. Supreme Court ruled in favor of cryptocurrency exchange Coinbase in a dispute involving the enforcement of arbitration clauses on June 23, Reuters reported.
The court issued an order to halt proceedings in one of the pending customer lawsuits — Bielski vs. Coinbase — while the exchange followed up on its appeal. A second lawsuit was dismissed by the Supreme Court following a review and will be moved into arbitration.
The ruling — split 5-4 — solidifies arbitration as a viable dispute resolution method, which businesses often prefer over litigation.
It also overturned previous rulings by lower courts, which allowed both lawsuits to proceed even after Coinbase filed an appeal against the initial rejection of its arbitration request.
Arbitration clauses are agreements between parties that require any disputes that arise between them to be resolved through arbitration rather than via courts.
The disputes
Abraham Bielski sued Coinbase after a scammer allegedly stole $30,000 from his account in 2021. The suit argued that the firm had violated the Electronic Funds Transfer Act by not investigating the case sufficiently and failing to reimburse Bielski.
The second lawsuit — dismissed by the Supreme Court — was filed by a group of Coinbase users who accuse the exchange of false advertising in relation to 2021 sweepstakes that offered Dogecoin in prizes.
Coinbase asked lower courts to force the two cases into arbitration based on its terms of service requiring users to resolve issues via arbitration. The request was denied, which prompted the company to file an appeal in the San Francisco Circuit Court of Appeals.
However, the lower court did not halt the cases despite the appeal being mid-process — forcing Coinbase to turn to the Supreme Court.
Win for arbitration
While the Supreme Court’s ruling is a victory for Coinbase and other businesses that rely on arbitration clauses, companies must ensure that their arbitration agreements are transparent and fair to all parties involved.
For users of cryptocurrency platforms, it is essential to read and understand the terms of service before engaging with any platform that involves their hard-earned assets.
The Supreme Court’s decision in favor of Coinbase signifies the recognition of arbitration as a legitimate dispute resolution method and highlights the importance of transparent terms of service for businesses operating within the cryptocurrency industry.
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