Supreme Court rules in favor of Coinbase
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Crypto exchange Coinbase on Friday secured a small legal victory in a case that has nothing to do with tokens nor trading.
Driving the news: The Supreme Court ruled 5-4 in favor of Coinbase over a narrow issue around the Federal Arbitration Act (FAA), a rule that for a century has protected businesses from the expense and risk of going to court to settle customer disputes.
Why it matters: The arbitration clause — found in contracts and labor agreements many Americans sign without a second thought — is considered the No.1 killer of class-action lawsuits.
What they're saying: Justice Brett Kavanaugh wrote for the narrow majority: "The sole question here is whether the district court must stay its pre-trial and trial proceedings while the interlocutory appeal is ongoing. The answer is yes: The district court must stay its proceedings."
- Andrew Pincus, a partner at law firm Mayer Brown, tells Axios via email: "This settles the issue: stays are automatic if a party appeals a district court decision refusing to enforce an arbitration agreement... The entire purpose of an arbitration agreement is to avoid the high cost and other burdens of court litigation."
- Coinbase VP of litigation Katherine Minarik said: "It makes sense that lower court litigation should be paused while an appellate court decides whether a case belongs in court at all."
Between the lines: The Supreme Court ruling is a blow to Coinbase customers represented in the Coinbase v. Bielski and Suski v. Coinbase cases.
Flashback: A lower court previously denied Coinbase's attempts to enforce arbitration against customer lawsuits, and the 9th Circuit appeals court denied the company's motion to hit pause on the hearings, while the court considers an appeal.
- The Supreme Court heard arguments in March, in what experts called a bellwether case that could mark a new era for consumer protection.
The bottom line: Nope. Advantage, Coinbase.
