Coinbase Worldwide Inc. (COIN.O) will ask the U.S. Supreme Court on Tuesday to stop customer lawsuits, including one by a user who sued after a fraudster stole money from his account, as it seeks to shift the disputes out of courts and into private arbitration.
The justices will hear Coinbase’s appeal of lower court judgments allowing planned class action lawsuits to proceed while it argues that the claims belong in arbitration.
Arbitration is cheaper and speedier than litigation, which might be tougher to oppose and risk higher damages verdicts.
Coinbase’s exchange accepts bitcoin and ether. The corporation claims that its user agreement mandates arbitration. The Federal Arbitration Act controls arbitration procedures and compels trial courts to cease action when a motion to compel arbitration is challenged.
Abraham Bielski sued Coinbase in California after a fraudster stole over $30,000 from his account in 2021. The action claimed the business violated the Electronic Funds Transfer Act by neither investigating nor recrediting Bielski’s account.
Former users sued the corporation for breaching California’s false advertising statute by tricking them into paying to enter the 2021 sweepstakes with dogecoin rewards.
The corporation claimed the user agreements mandated arbitration in both cases, but federal judges refused. Coinbase promptly challenged both rulings, but in 2022, the San Francisco-based 9th U.S. Circuit Court of Appeals denied its pleas to halt litigation during those appeals.
A sweepstakes judge postponed proceedings until March after Coinbase petitioned the Supreme Court to hear the issue.
“Defeats the objective of arbitration,” Coinbase said to the Supreme Court.
June ends with a decision.
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