The Supreme Court refused emergency applications from Coinbase, a major online cryptocurrency exchange, to stay two class-action lawsuits pending against the company.
Coinbase had asked the court to put two lawsuits filed by former users on hold, arguing that not doing so would cause the company irreparable harm.
The U.S. Court of Appeals for the 9th Circuit also previously rejected Coinbase’s applications.
The Supreme Court disagreed with Coinbase, issuing a series of unsigned orders denying the company’s various requests late in the day on Aug. 10. The applications had been presented to Justice Elena Kagan who referred them to the full court. The court provided no reasons for turning down the applications.
At the same time, the court also refused to expedite Coinbase’s petition asking the justices to agree to hear its appeals against the 9th Circuit decisions.
Coinbase was founded in 2012, originally as a platform for sending and receiving Bitcoin, the best-known cryptocurrency, according to Investopedia.
The decentralized company now has more than 4,900 employees worldwide but has no main headquarters. The exchange now deals in more than 100 tradable cryptocurrencies, including Bitcoin, Ethereum, Dogecoin, Cardano, Stellar Lumens, and Litecoin.
The platform has more than 98 million users in more than 100 countries that trade about $309 billion per quarter. It has $256 billion in assets and supports 13,000 financial institutions.
Former customer Abraham Bielski is suing Coinbase after a scammer cheated him out of more than $31,000. Bielski allowed a person who posed as a representative of payment processor PayPal to access his account.
Coinbase stated that it told customers about this kind of scam in its user agreement that customers sign, but Bielski said the company showed little interest in his plight after he sought redress for the fraud.
The company argued that because Bielski signed the user agreement, which requires arbitration of disputes, he should have to proceed with arbitration.
U.S. District Judge William Alsup disagreed, holding that the agreement violated the general principles of contract law and could therefore not be enforced.
Coinbase appealed the ruling and sought to halt the lawsuit while the appeal was pending.
The federal district court and the 9th Circuit refused to halt Bielski’s lawsuit, allowing the case to proceed in court instead of in private arbitration.
“Because Coinbase’s arbitrability appeal automatically ousted the district court’s jurisdiction to proceed before the appeal is resolved, Coinbase is entitled to an automatic stay of district court proceedings,” Coinbase attorney Neal Katyal wrote in a court brief.
Bielski’s attorney, Hassan Zavareei, argued in a brief that Coinbase wouldn’t be harmed if the case were to proceed.
“The only injury Coinbase has identified is the additional cost of litigation in the district court that it might not incur in arbitration,” he wrote, noting that litigation costs don’t “constitute irreparable injury.”
Coinbase also tried to compel former customer David Suski to take his dispute to arbitration.
A federal district court and the 9th Circuit both ruled against the company, refusing to put the lawsuit on hold.
Although many investors are unfamiliar with cryptocurrencies, which are famously volatile investments, they’ve been growing in popularity.
There are reportedly more than 19,000 different cryptocurrencies in circulation.
A cryptocurrency can be defined as a digital currency that’s secured by cryptography, which reportedly makes counterfeiting or double-spending almost impossible.
“Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet,” Forbes reported.
The transactions are verified on a blockchain, which is “an open, distributed ledger that records transactions in code.”
This article by Matthew Vadum appeared August 11, 2022, in The Epoch Times.