The US Supreme Court is meeting the wishes of the now third-largest cryptocurrency exchange with big news: it will review the two legal pending lawsuits on Coinbase as per the company’s request.
The US giant had expressed a willingness to resolve legal actions filed against the exchange by going through the arbitration route and not through a court of competent jurisdiction.
The will of the company listed on the New York Stock Exchange was granted recently thanks to a court ruling last Friday, 9 December.
The ruling gives the cryptocurrency company a chance to make its case about the relevance of the lawsuits attributed to it by going through the more congenial tool of arbitration.
News about Coinbase’s lawsuits in the crypto sector
Coinbase is grappling with two lawsuits in particular towards which in both cases it believes it does not have to make its case before a judge but that an amicable resolution would be possible.
The first lawsuit concerns a user who has taken legal action against the exchange company for a refund of $31,000 that he allegedly lost through Coinbase’s fault.
In essence, the exchange should refund $31,000 for losing it after the user granted remote access to a self-styled Coinbase operator who later turned out to be a scammer.
The company said it is willing to cooperate with the authorities for everything in its power to help the user recover the amount in exchange for amicably settling the matter right through arbitration.
The other lawsuit to be addressed involves alleged circumvention of California consumer law.
The exchange is accused of failing to clearly and unequivocally provide participants in a $1.2 million Dogecoin lottery with critical information.
The information under debate is that participants were in no way obligated to buy or sell Dogecoin or other cryptocurrencies to join the lottery causing uncertainty and leading some users into error.
The court in the past had rejected the request by Coinbase to intercede and give the possibility of arbitration, and the same fate had befallen when the federal district court of jurisdiction was called in.
Now the situation is reversed and in a short time the US Supreme Court court has granted the cryptocurrency exchange company the chance to make its case.
The ruling that some suspect was already in the air came within a short time of statements by Armstrong, CEO of Coinbase who said that corporate revenues could plummet by 50% this year.
Brian Armstrong was keen to explain that the FTX deal, although it undermined investor confidence, was not the sole cause of such a dismal year for the crypto world and that even the most capitalized digital currencies such as Bitcoin or Ethereum suffered a major drop in value and volume.
In addition to bad news on the revenue side, there is also bad news for Coinbase shares.
On Wall Street this year, the stock has lost more than 80% of its value precisely because of the beating taken by the cryptocurrency sector as a whole.
To help cool the forex losses, the CEO intervened by clarifying some points and distancing himself from the latest events in the crypto sector.
FTX, which has done so much harm to consumer confidence and so many investors, can’t be equated with other exchanges, also because it is a company whose headquarters are in the Bahamas.
In this Caribbean archipelago the regulations as well as the minimum controls are much looser and FTX, despite boasting of certificates that later turned out to be fake, had with it an aura of suspicion from the most observant.
Coinbase unlike FTX is headquartered in the United States of America, a country with a more articulate and entrenched history in the crypto world and whose regulations ensure much tighter controls especially with regard to protecting the investments of US citizens.
The third largest exchange company in the world is listed on Wall Street and regularly undergoes meticulous scrutiny by all regulators SEC (Securities and Exchange Commission), plus it is subject to the quarterly publication of its earnings which is a kind of slab of the company’s accounts and plans that leaves little room for imagination and reassures investors about transparency.
On these issues Brian Armstrong noted:
“Coinbase is not in trouble. We are very well capitalized: we have $5 billion of cash on our balance sheet and we hold those assets in dollars, so we are not exposed to the volatility of cryptocurrencies.
Client funds are segregated, this is an important thing to consider. I think we’ve also been very clear to the public that Coinbase is a very different company than FTX. We are registered right here in the USA. We are not in an offshore jurisdiction subject to minimal controls. Coinbase is best in class as a public company – we just met a completely different standard than what others have been able to do.”