Coinbase Fronts Supreme Court Over User Lawsuits in Crypto First

As the SEC barrels down on Coinbase, the top US exchange is in Supreme Court over lawsuits its says should be handled in arbitration



In the first crypto-related US Supreme Court appearance, justices appear split over whether to freeze Coinbase customer lawsuits while the exchange awaits appeals decisions.

Coinbase is trying to push two lawsuits into arbitration, seeking Supreme Court intervention after lower courts allowed the cases to proceed.

While Coinbase is separately dealing with a legal threat from the Securities and Exchange Commission over some of its products, the cases before the Supreme Court have more to do with legal procedure than with digital assets themselves. 

One was brought forward by a California-based plaintiff who argues a scammer pretending to be a PayPal representative scored remote access to his Coinbase account. 

Their digital wallet was said to have been eventually drained of more than $31,000, after which they encountered a “customer-service nightmare.” The victim tried to use Coinbase’s live chat to seek help, but they said they were consistently met with a bot providing futile responses. 

The plaintiff later sued Coinbase for violations against the Electronic Funds Transfer Act by not reimbursing him for the loss.

A second case was brought by Coinbase users who claimed the firm violated California’s False Advertising Law by allegedly duping them into a pay-to-play sweepstakes for Dogecoin prizes in 2021.

Coinbase’s user agreement, like some other crypto firms, requires disputes to be resolved by arbitration. Arbitration is primarily a faster and cheaper route than court litigation, which can carry the burden of heavy damages and higher legal fees. 

But plaintiffs in both lawsuits bypassed Coinbase’s user agreement and went straight to California courts, which agreed to hear the disputes.

Coinbase immediately requested the court of appeals to block the litigations from moving ahead until a ruling on the matter is finalized.

So, is it right for these cases to proceed before the appellate court’s ruling? Even top court officials aren’t sure.

Coinbase Supreme Court ruling could impact big tech

Six circuit courts maintain that appeals should result in mandatory stays, but three others, including the Ninth US Circuit Court of Appeals, refused requests to put further litigation on hold.

During arguments, justices shared divided opinions over Coinbase’s wrangling. Others showed they were concerned about the consequences of companies looking to arbitrate customer lawsuits, as this technique generally favors the company over users.

Justice Brett Kavanaugh reportedly questioned the downside for Coinbase — and other companies in the same position — if litigation were permitted to continue before a decision on arbitration could be made.

Kavanaugh pointed out that Coinbase could be forced into “massive settlements” without the appellate court deciding on whether arbitration is the “appropriate forum,” reported.

Justice Ketanji Brown Jackson indicated she didn’t agree with Kavanaugh’s position, saying defendants given the ability to appeal aren’t really forced into settling. “That seems like a pretty significant arrow in their quiver to not settle because they’re about to go to the appeals court, and hopefully the appeals court will move quickly and resolve this in their favor,” she said.

Coinbase’s current situation is notable not only for crypto. The Supreme Court’s decision is relevant to tech companies that also use arbitration agreements when faced with lawsuits (Blockworks has reached out to Coinbase for comment).

Peter Rutledge, dean at the University of Georgia School of Law, reportedly said the court was “closely divided.” He expects most of the justices will eventually be in favor of a default mandatory stay order, which means judicial proceedings could be temporarily stopped.

A trial judge in the Dogecoin sweepstakes lawsuit decided to halt the case until the end of March, after Coinbase moved the Supreme Court to hear the case, Reuters reported.

The Supreme Court is expected to rule by June end.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png


Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.



Do Kwon may miss the start of the March 25 trial in the SEC’s case against the former executive and Terraform Labs


Riot Platforms bought 31,500 more mining machines while CleanSpark has begun operating in Mississippi


Dencun was activated on all testnets, a blog post Tuesday said


Hut 8 also announced it broke ground on a Texas mining site


Uniswap aims to become a “complete platform for swapping” following its latest product releases


Continued demand for bitcoin ETFs coupled with greater demand for bitcoin from exchanges is contributing to price moves, analysts say