The cryptocurrency market received another boost after major Wall Street entities entered the arena.
A recent U.S. Supreme Court ruling delivered a favorable outcome for Coinbase, the largest cryptocurrency exchange in the U.S. By a vote of five in favor and four against, the justices ruled that litigation brought against Coinbase in a lower federal court must be paused while the exchange appeals and moves the case to arbitration.
Justice Brett Kavanaugh, one of the supporters of the ruling, asserted that allowing district courts to proceed with cases during appeals undermines the efficiency, cost-effectiveness, and minimal intrusion offered by arbitration.
The ruling implies that Coinbase can halt customer litigation while it seeks appeal and moves disputes from the courts to private arbitration. Businesses generally prefer arbitration to litigation when facing allegations. Consequently, this decision strengthens Coinbase's ability to transition accusations from customers and employees into arbitration.
Following the announcement of the Supreme Court's decision, Coinbase's stock price rallied on Friday. After a low opening, the shares accelerated in the morning, hitting a daily high of $61.2 midday - a near 6.5% increase - and looked set to hit a new closing high since June 2.
Cryptocurrency prices also saw an upswing during the trading day. Bitcoin surged past $31,400, hitting a midday high not seen since June of last year. This represents a rise of over $1,000 from the initial American trading level just above $30,000 and a near $1,600 recovery from the early Asian market low, representing a more than 5% increase. This marks Bitcoin's third significant midday rally this week, cumulatively swelling to approximately 20% growth.
Analysts believe the recent surge in cryptocurrency is largely due to BlackRock's application last Friday to the U.S. SEC to issue its first Bitcoin spot ETF and the launch this week of the EDX Markets cryptocurrency exchange, supported by Fidelity, Charles Schwab, and Citadel Securities.
Coinbase is currently appealing two lawsuits to move to arbitration, both of which were initially denied by federal court judges. In one case, Coinbase user Abraham Bielski alleges he was duped into allowing access to his Coinbase account, resulting in the theft of over $30,000 worth of assets, and seeks restitution of $31,000.
In another case, four users accuse Coinbase of tricking them into paying at least $100 to participate in a lottery for a chance to win up to $1.2 million in Dogecoin, without adequately disclosing that participants were not required to buy or sell Dogecoin.
Some business groups supporting Coinbase argue that letting litigation continue would result in unnecessary costs. Consumer advocates assert that judges should have the authority to decide which claims should be heard during an appeal, just as in other areas.
Coinbase's Deputy General Counsel in charge of litigation, Katherine Minarik, welcomed the Supreme Court's decision, stating it recognizes that when cases suitable for arbitration are instead subjected to protracted and costly court litigation, companies like Coinbase and their customers both bear a significant burden. She said it makes sense for lower courts to pause litigation during the appeal.
