On Tuesday, the U.S. Supreme Court will hear arguments in a case that marks Coinbase’s first-ever crypto-related litigation. However, despite its connection to crypto, this case is about whether a lawsuit can proceed in federal court while one party, in this case, Coinbase, attempts to send the dispute to arbitration.
The San Francisco-based crypto exchange is appealing a previous decision that denied its motion to compel arbitration in two class-action lawsuits brought against it.
The U.S. District Court for the Northern District of California denied Coinbase’s motion last April, citing the exchange’s arbitration clause as “unconscionable” and using a “litigation gimmick” that disadvantages users. Coinbase then appealed to the 9th U.S. Circuit Court of Appeals, but the decision was upheld in July.
The two lawsuits in question, Bielski v. Coinbase and Suski v. Coinbase involve allegations ranging from the sale of unregistered securities to mishandling the exchange’s public listing to lax security measures leading to a hack. The case that will be heard on Tuesday concerns whether Coinbase misled customers in a sweepstakes event held in June 2021.
Coinbase has become a target for class-action lawsuits, and if it succeeds in its appeal to the Supreme Court, future suits could be forced into arbitration, making it easier for the exchange to deal with them.
The court’s decision could also have a significant impact on the litigation landscape in the cryptocurrency industry and have wide-ranging implications for other crypto companies facing similar lawsuits.
The case is set to begin at 10:00 a.m. ET on Tuesday, with oral arguments expected to last an hour. Although the case is not a crypto case itself, it highlights the increasing legal challenges that crypto companies are facing as the industry continues to grow and mature.
