- The US Supreme Court ruled that the district court must stay proceedings in a class action lawsuit when interlocutory appeal is ongoing.
- Coinbase filed an appeal after its motion to compel arbitration was denied.
- The ruling comes days after Coinbase was sued by the SEC over allegations of violating securities laws.
Coinbase has scored a notable victory after the US Supreme court’s ruling on its appeal over arbitration.
On Friday, the apex US court ruled in favour of the crypto exchange’s argument, stating that a federal court must stay proceedings in a lawsuit where a defendant’s appeal for arbitration is ongoing.
US Supreme Court sides with Coinbase
The Supreme Court’s verdict comes after the exchange filed an appeal earlier this year after its “motion to compel arbitration” was denied the US District Court for the Northern District of California.
Coinbase moved to file an interlocutory appeal and sought to have the District Court stay proceedings of a class action lawsuit pending the resolution of its appeal. That too had been denied at the US Court of Appeals for the Ninth Circuit.
“When a federal district court denies a motion to compel arbitration, the losing party has a statutory right to an interlocutory appeal. 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,” Justice Brett Kavanaugh noted in the Supreme Court’s opinion.
Coinbase is facing a class action lawsuit filed by Abraham Bielski at the US District Court for the Northern District of California, in which he alleges that the US-based cryptocurrency exchange “failed to replace funds fraudulently taken from the users’ accounts.”
The Supreme Court notes in its ruling that “Coinbase’s User Agreement provides for dispute resolution through binding arbitration.” This is what informed the exchange’s move to file for arbitration – which the lower courts denied.
“We are grateful to the Supreme Court for its careful review. Another example of why I believe in the American court system. The rule of law is sometime slow, and at times disappointing. But it remains our last, best hope in an imperfect democracy,” Coinbase Chief Legal Officer Paul Grewal tweeted.
While the majority was in favour of Coinbase, Justice Ketanji Brown Jackson dissented, noting that “today’s majority invents a new stay rule perpetually favoring one class of litigants—defendants seeking arbitration.”
According to Justice Jackson, the move could have “significant implications for federal litigation.”
Coinbase was recently sued by the US Securities and Exchange Commission (SEC) over allegations of violating securities laws.