Crypto Lawsuits Drop as Arbitration Clauses Gain Strength
There's been a notable drop in active lawsuits against crypto exchanges and providers in the US, with no such cases involving an appellate court decision on arbitration clauses in sight. This shift can be attributed to enhanced security measures and updated terms of service, including limitations of liability and class action waivers. The Ninth Circuit's recent decision in Bielski v. Coinbase, Inc. underscores the significance of robust online contracting practices for crypto entities in mitigating litigation and liability risks.
In Bielski v. Coinbase, the Ninth Circuit rejected a user's challenge to Coinbase's arbitration provision. Coinbase has since moved to dismiss or compel arbitration for the remaining defendants, with oral argument scheduled for later this spring. The court found Coinbase's delegation provision in its arbitration agreement enforceable, despite arguments of unconscionability. While the court acknowledged some procedural unconscionability, it was not deemed onerous or beyond the reasonable expectation of the user.
This decision aligns with the Supreme Court's previous stance, which held that district courts must stay pre-trial and trial proceedings during an interlocutory appeal on the question of arbitrability. The decline in active civil suits against crypto providers reflects the effectiveness of these legal developments in discouraging frivolous lawsuits and promoting efficient dispute resolution.
The Ninth Circuit's decision in Bielski v. Coinbase, coupled with the overall decline in active civil suits against crypto providers, signals a shift towards more robust and enforceable arbitration clauses in the crypto industry's terms of service. This trend is expected to continue, further limiting litigation risks and promoting a stable business environment for crypto-related entities.
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