The first crypto-related case has made its way to the U.S. Supreme Court, which heard arguments from Coinbase disputing a lower court’s decision to deny arbitration.
According to court documents on Tuesday, the justices overseeing the proceedings appeared divided on whether to grant Coinbase the right to halt customer lawsuits from progressing through the courts.
The case relates to a class action lawsuit filed by a customer, Abraham Bielski, who claims that the exchange’s inadequate security measures had allowed a scammer to steal $31,000 worth of crypto from his account. Coinbase argued that his claims should be settled in private arbitration as per the user agreement and appealed the court’s decision to allow him to pursue it.
When Congress granted Coinbase the right to appeal this decision, they did something “very unusual,” said the exchange’s legal representation Neal Katyal. He argued that this implied a background rule that stipulates a matter shouldn’t keep going in court, where it gets into the discovery phase and a company may be “coerced into massive settlements.”
To this point, Bielski’s lawyer Hassan Zavareei argued that there are risks associated with slowing down the litigation process.
Zavareei stressed that the urgency to push this case through the courts quickly was motivated by the defendants who have lost large sums of money. He stated that “the entire cryptocurrency market is collapsing under our feet” and Coinbase might not be around by the time court decisions are decided.
The court is scheduled to provide a ruling on the arguments by June. While this case doesn’t relate directly to digital assets, the verdict could set a precedent for future class-action lawsuits filed by customers against major crypto exchanges.