U.S. Supreme Court agrees to hear Coinbase arbitration dispute

While Coinbase appeals judges' decisions declining to order its users to arbitrate their claims, the justices decided to take into account whether two planned class actions by customers suing Coinbase might proceed.

Neal Katyal, an attorney for Coinbase, said in a statement, "We are pleased the Supreme Court agreed to consider our appeal, and we look forward to its determination of this matter."

The Federal Arbitration Act, a U.S. law, mandates that agreements clients sign to bring legal claims against businesses in private arbitration be upheld in accordance with their contractual provisions.

Business organizations claim that arbitration is a speedier and more effective option than filing a lawsuit. Plaintiffs' attorneys contend that arbitration benefits businesses and that bringing class-action lawsuits in court on behalf of bigger groups of people gives consumers more clout and access to a wider range of remedies.

A customer named Abraham Bielski claimed in one of the lawsuits before the Supreme Court that he was deceived into granting access to his Coinbase account to a con artist who then stole more than $31,000 from him.

Bielski filed a lawsuit against Coinbase, claiming that the business must credit users' stolen cryptocurrency in accordance with the Electronic Funds Transfer Act.

Another California case was a lawsuit filed by former Coinbase customers who claimed they were tricked into spending $100 or more to enter a sweepstakes that offered the possibility to win prizes worth up to $1.2 million in Dogecoin.

Judges in both instances rejected Coinbase's claims that its user agreements forced customers to pursue their claims in arbitration.

In San Francisco, Coinbase contacted the 9th U.S. Circuit Court of Appeals to halt the trial court proceedings so that it could pursue appeals, but the court denied its pleas.

A trial judge paused the sweepstakes lawsuit's proceedings while the company's appeal was pending after Coinbase requested that the Supreme Court consider the case, but Coinbase said the decision shouldn't exclude its Supreme Court appeal.

Bielski's attorney, Hassan Zavareei, said in a statement that the case offers the Supreme Court an opportunity to overturn lower courts "that have developed unique criteria to promote arbitration over litigation."

"Corporations like Coinbase shouldn't be permitted to slow-roll litigation through unique automatic stays that appear nowhere in the Federal Arbitration Act," he said. "These companies want to push consumers into arbitration and district courts reject the endeavor."

In the sweepstakes case, the Coinbase users' attorney, David Harris, expressed excitement about tackling the issue and "perhaps obtaining a beneficial result for plaintiffs in numerous types of civil lawsuits across the country."