The U.S. Supreme Court will hear arguments in its first crypto-related case on Tuesday when lawyers for San Francisco-based crypto exchange Coinbase will try to convince the nine Justices to pause a pair of class-action lawsuits against the exchange.
While the case to be heard on Tuesday involves crypto, it is not itself a crypto case. Instead, this case is a fairly esoteric, procedural argument over whether a lawsuit can proceed in federal court while one party, Coinbase, is attempting to send the dispute to arbitration.
Coinbase is in the process of appealing an earlier decision by a federal court in California allowing the two lawsuits, Bielski v. Coinbase and Suski v. Coinbase, to continue, in contrast with Coinbase’s user agreement, which requires disputes to be sent to arbitration.
Arbitration is an out-of-court method of dispute resolution in which the odds are often unfairly stacked against consumers.
The U.S. District Court for the Northern District of California denied Coinbase’s motion to compel arbitration in the Bielski case last April, arguing that the exchange’s arbitration clause as “unconscionable” and uses a “litigation gimmick” to disadvantage users in the case of a dispute.
When Coinbase appealed with the next-highest court, the San Francisco-based 9th U.S. Circuit Court of Appeals, in July, the decision was upheld.
Coinbase has become something of a magnet for class-action lawsuits, with judges swatting down some attempts and allowing others to forge ahead.
The suits have covered a wide range of issues, from allegations the exchange sold unregistered securities (after the U.S. Securities and Exchange Commission deemed certain tokens to be securities) to claims the exchange mishandled its public listing.