Supreme Court Says Customer’s Lawsuit Against Coinbase Must Pause

The U.S. Supreme Court has ruled that a lawsuit against Coinbase must pause while the company tries to take the matter to arbitration.

A case brought by a customer against Coinbase was paused by the decision while the cryptocurrency company appeals an earlier court decision in an effort to have it go to arbitration, Bloomberg reported Friday (June 23).

Supporters of Coinbase had argued that letting the case proceed would have caused unnecessary costs, while those of the customer said a judge should decide whether the proceedings continue during the company’s appeal, according to the report.

Writing for the court, Justice Brett Kavanaugh said: “If the district court could move forward with pre-trial and trial proceedings while the appeal on arbitrability was ongoing, then many of the asserted benefits of arbitration (efficiency, less expense, less intrusive discovery, and the like) would be irretrievably lost.”

Arbitration agreements are common in the crypto industry and across retail businesses, according to the report.

The Supreme Court agreed in December 2022 to hear an appeal from Coinbase in two lawsuits against the firm, allowing Coinbase to argue that the suits against it should be resolved in arbitration and not in court.

The case that was addressed in Friday’s decision by the Supreme Court involves a customer who is asking the company to reimburse him $31,000 he said he lost by giving remote account access to a scammer.

Glen Chappell, attorney for plaintiff Abraham Bielski, told CNBC at the time of the Supreme Court’s agreement to hear the case that he and other plaintiffs’ lawyers had opposed Coinbase’s move to take the case to the high court.

“We don’t think that companies like Coinbase should be entitled to an automatic stay of litigation after a district court has already determined their arbitration is unlawful,” Chappell said in December.

The case began when Bielski was contacted by a scammer in 2021 who claimed to be a PayPal rep, and Bielski gave remote access to his Coinbase account, leading to the crypto theft of $31,000.

The customer service offered by Coinbase was reportedly “meager and ineffective,” the case said.