ATLANTA-The Supreme Court decided to accept an appeal from Coinbase, a large bitcoin exchange.
Coinbase is attempting to get two consumer lawsuits against the business settled through private arbitration rather than in federal court. Customers who launched a complaint against Coinbase are reportedly withholding account details, thus halting efforts to bring the matter to arbitration.
The class action lawsuit aims to reimburse users who allegedly had their accounts breached and “incurred losses deriving from the unlawful transfer of assets” as a result of Coinbase’s claimed cybersecurity shortcomings.
The case reads as follows:
Contrary to its representations, Coinbase does not properly employ standard practices to keep consumers’ accounts secure. And Coinbase improperly and unreasonably locks out its consumers from accessing their accounts and funds, either for extended periods of time or permanently. Because of the extreme volatility of cryptocurrencies’ value — with freefalls of 40% within 24 hours not unheard of — the inability to access an account to sell, buy, or trade cryptocurrency leads to severe financial loss to account holders.
Making matters worse, Coinbase fails to timely respond to customer pleas for support and help, and also fails to preserve and safeguard customer assets as it promises. Coinbase’s failures have prevented Plaintiff and Class Members from having “full control of [their] crypto” and from being able to “invest, spend, save, earn, and use,” or withdraw their funds as Coinbase promises.
Moreover, Coinbase does not disclose that the crypto assets (or “cryptocurrency”) on its platform are securities. Indeed, Coinbase boldly flouts federal and state laws by proclaiming it does not need a registration statement for those securities and by refusing to register as a securities exchange or as a broker dealer.
As a result of Coinbase’s conduct, Plaintiff and Class Members have been damaged through the loss of their wallet and account access, the assets and Case 1:22-cv-03250-TWT Document 1 Filed 08/15/22 Page 3 of 52 4 investments in those accounts, the theft of sensitive personally identifiable information stored in their Coinbase accounts, and, among other things, their investment opportunities.
Plaintiff opened an account and a wallet with Coinbase through which he deposited funds and traded cryptocurrency. Consistent with Coinbase’s representations, Plaintiff had a reasonable expectation that he would be able to access his account and wallet whenever he wanted.
Plaintiff, however, was locked out of his account, freezing the account’s buy, sell, trade, and withdraw features. His demand that Coinbase unfreeze his account went unresolved for an extended period, and his requests for support from Coinbase have been unresolved to Plaintiff’s satisfaction.
Had Plaintiff known that Coinbase would leave his assets vulnerable to theft and would freeze his account, Plaintiff would not have used Coinbase’s service. As a result of Defendants’ acts and inaction, Plaintiff has suffered injury in fact and lost money or property. Plaintiff desires to continue to maintain his account and wallet with Defendants, provided the misconduct is corrected.
Nevertheless, unless and until Defendants correct their misconduct, Plaintiff will be subjected to Defendants’ ongoing conduct complained of in this Complaint.
The question that the Supreme Court will examine in Coinbase’s case is the very technical question of whether a party in a lawsuit can be required to continue defending the case in federal district court proceedings while asking an appeals court to refer the dispute to an arbitrator.
Follow the full case at CourtListener.com
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