Crypto Exchanges Gain Legal Boost: Coinbase Arbitration Upheld
Cryptocurrency exchanges and providers have bolstered their legal protections against theft and hacking incidents. Meanwhile, a recent court case has reinforced the enforceability of arbitration clauses in crypto-related disputes.
In the case of Bielski v. Coinbase, the Ninth Circuit has upheld the arbitration provision of Coinbase's terms of service. The court dismissed a user's challenge, despite finding some procedural unconscionability in Coinbase's delegation provision. The decision highlights the importance of robust online contracting practices for crypto entities to mitigate litigation risks.
Coinbase has since moved to dismiss or compel arbitration for the remaining defendants in the case, with oral arguments scheduled for later this spring. The Ninth Circuit also ruled that Coinbase's pre-arbitration dispute resolution procedures were reasonable for users. This decision follows a Supreme Court ruling that district courts must stay pre-trial and trial proceedings during interlocutory appeals on arbitrability.
Following this case, there has been a decrease in active civil suits against crypto exchanges and providers. This can be attributed to improved security protocols and updated terms of service, which now include provisions protecting against crypto theft and hacking incidents.
The Ninth Circuit's decision in Bielski v. Coinbase underscores the importance of clear and enforceable arbitration clauses in crypto-related contracts. As crypto entities continue to enhance their security measures, the industry can expect a further reduction in litigation.
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