Cryptocurrency exchange Coinbase on Friday secured the backing of the US Supreme Court to pause a class-action lawsuit by one of its customers in order to pursue efforts to send the case into private arbitration. Arbitration is an out-of-court dispute resolution method in which parties to a dispute agree to have their differences resolved by an impartial third party, known as an arbitrator.

Coinbase Secures Court Support

In April 2022, Abraham Bielski, a California resident, filed a class action lawsuit against Coinbase, alleging that scammers posing as PayPal representatives stole $31,000 from his crypto wallet with the exchange in 2021. Bielski claims he unsuccessfully failed to reach Coinbase for help.

In another class action lawsuit, former Coinbase users alleged that the exchange tricked them into paying for a sweepstakes in 2021, thereby breaking California’s law on false advertising.

Last year, a district court in California dismissed a motion filed by Coinbase asking that litigation in the Bielski case be suspended for its appeal to take the case into arbitration in line with dispute resolution agreement customers signed when joining the platform. A Court of Appeal also subsequently upheld the lower court’s decision.

However, the Supreme Court on Friday passed a 5-4 majority ruling, giving Coinbase the go-ahead to appeal for arbitration in the Bielski case. Arbitrations are believed to be cheaper for organizations, easier to manage and can be bad for customers when forced.

First Crypto Case in US Supreme Court

Meanwhile, the top court dismissed an appeal to intervene in the other suit involving sweepstakes, according to Reuters. According to the outlet, Conservative Justice Brett Kavanaugh, one of the justices that supported the ruling, noted that not backing Coinbase’s appeal could be deleterious to the advantages of arbitration.

On the contrary, justices that opposed the ruling argued that permitting both a court trial and an arbitration on the same case helps to ensure that the interests of all parties in the case are served. The case marked the first time a crypto company argue its case before the Supreme Court in the US. However, the case is not related to Coinbase’s crypto business.

Coinbase's legal victory at the Supreme Court comes as the largest crypto exchange in the United States battles allegations from the country's securities watchdog that it operates an illegal trading platformTrading PlatformIn the FX space, a currency trading platform is a software p...Read this Term and offers unregistered securities. California's state regulator also recently ordered the exchange to 'desist and refrain' from offering its crypto staking programme to residents in the state, Finance Magnates reported.