Coinbase Dispute To Provide Us Supreme Court With First Exposure To Cryptocurrency
A legal dispute involving disgruntled customers of Coinbase Global Inc. is set to provide the US Supreme Court with its first exposure to the world of cryptocurrency, and this case could signal future legal challenges that will shape the industry's future.
A legal dispute involving disgruntled customers of Coinbase Global Inc. is set to provide the US Supreme Court with its first exposure to the world of cryptocurrency, and this case could signal future legal challenges that will shape the industry’s future. This joint case is happening at the same time as other high-profile legal battles are heading towards the court, and these cases will have implications for both customers and companies in the fledgling cryptocurrency industry.
Gerard Comizio, the associate director of the business law program at American University’s Washington College of Law, has said that this case is just the beginning of what is likely to be a growing trend of cryptocurrency-related litigation. The rapid growth of the crypto market, combined with recent incidents of fraud and bankruptcy, has created a series of pressing legal questions that need to be answered.
SEC’s classification of crypto assets as securities
One of the biggest issues facing the industry is the Securities and Exchange Commission’s efforts to classify crypto assets as securities, which would place them under federal regulatory oversight. While the SEC has achieved some early victories, the agency may face more skepticism from the Supreme Court, which has a history of curtailing the power of federal regulatory bodies.
Ripple Labs Inc. case waiting for key ruling from federal judge
Now, both sides are waiting for a key ruling from a federal judge in New York, where Ripple Labs Inc. is facing accusations from the SEC of selling unregistered tokens without proper disclosure. Ripple’s XRP is currently the sixth-largest cryptocurrency token by market capitalization, according to CoinMarketCap.
Two potential other cases that may reach the Supreme Court, one of which concerns the rejection of a proposed Bitcoin exchange-traded fund by the SEC. The case revolves around Grayscale Investments LLC’s attempt to convert its $15 billion Bitcoin trust, and the company has indicated that it will appeal to the Supreme Court if necessary. A federal appeals court in Washington is expected to rule on the matter in the coming months. The court had previously approved a similar product based on Bitcoin futures, and the case will test the SEC’s approach to regulating cryptocurrencies.
The other case currently before the Supreme Court is a procedural battle over arbitration rather than a crypto-specific issue. The case concerns Coinbase, which is backed by business groups including the US Chamber of Commerce. The company is arguing that trial court proceedings should be automatically put on hold when a party files a non-frivolous appeal seeking to compel arbitration. A federal appeals court had refused to halt the lawsuits.
Coinbase arbitration case currently before Supreme Court
The lawsuits against Coinbase involve claims by a customer who lost $31,000 after giving a scammer remote access to his account and another lawsuit about a Dogecoin sweepstakes that did not adequately disclose that entrants did not have to buy or sell the cryptocurrency. Arbitration agreements are common in the crypto industry, as they are with other retail businesses that have large customer bases. Coinbase is arguing that it should not be treated differently from other companies in this regard.
Legal challenges facing the cryptocurrency industry
The crypto industry is set to face significant legal challenges in the near future. While the SEC has already taken steps to regulate certain cryptoassets, such as Bitcoin, the Commodity Futures Trading Commission has also called for federal oversight of these types of tokens. This would require Congress to pass new legislation. Meanwhile, courts will need to address issues related to federal tax, money-laundering, and antitrust laws as they apply to the industry. Additionally, judges may encounter jurisdictional challenges arising from the decentralized nature of blockchain technology. These issues will need to be resolved in order to provide clarity for businesses and consumers operating in the crypto space.