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- 1 The Coinbase case is a dispute on how courts need to handle scuffles over arbitration.
- 2 This Coinbase vs Bielski will be the first cryptocurrency case in the U.S. Supreme Court.
On March 21, Coinbase, the crypto exchange, argued in an Arbitration Case in the U.S. Supreme Court. Coinbase stated that its disputes on forcing customers into arbitration must freeze the courts while the arguments play out. This case has a small direct effect on Coinbase’s digital assets business. That’s why this case could be significant for the crypto exchange and other industry companies while they clash with clients.
According to a CoinDesk report, Coinbase argued to the justices that when a court rules that a customer deserves to settle a dispute in a courtroom instead of the arbitration outlined in their user agreement, a company appeal should halt that case from any further progress through the courts until the appeal is settled.
Neal Katyal, the Lawyer representing Coinbase, said, “Congress did something very unusual” by allowing this power to appeal when a court denies a forced arbitration immediately. He also highlighted the “background rule” that says the law doesn’t enable the courts to keep going if it’s used.
Suppose any customer needs to move into the phase where information and evidence are exchanged. In that case, the company could be “coerced into a massive settlement” because unwanted information comes to light, negating the purpose of the arbitration. As Katyal added, “That toothpaste can’t later be put back into the tube.”
Coinbase Inc. vs. Bielski
In the Coinbase Inc. vs. Bielski case, customer Abraham Bielski had initially accused the crypto exchange of lax protections when a fraudster stole $31,000 from his account. A court found that he could go ahead and pursue that complaint in the courts, which the crypto exchange appealed. When the matter was rolling in the court, the crypto exchange argued its appeal should have stopped it.
Hassan Zavareei, Bielski’s representative, said that “the entire cryptocurrency market is collapsing under our feet.” He also argues that a company’s purposeful and automatic delays could affect a person’s chance to go after the company if the business fails during the wait. A plaintiff could “wonder whether Coinbase will be around” while awaiting the appeal. Over Coinbase’s argument that Congress meant for the automatic “stay” or a legal delay, Zavareei said, “it’s just not there.”
Chief Justice John Roberts said this appeal force offered companies a “huge benefit” in that they don’t have to wait until a case is over. “This is what they gave you,” he said. “Why isn’t that enough?”
Many justices raised difficulty for Coinbase’s lawyer with difficult questions and frequently interrupted his responses. Meanwhile, Justice Elena Kagan was particularly critical in this case. She said, “This district court is not stepping on the appeals court,” adding that “the two can go their merry ways.”
However, Justice Brett Kavanaugh, praised the case for making a “strong point” about related statutes demonstrating congressional intent for this one.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
