Cryptocurrency exchange Coinbase (COIN) has lost its bid to force arbitration in a lawsuit over the theft of a user's crypto worth over $31,000.
- Abraham Bielski was contacted by a scammer last year claiming to be a PayPal (PYPL) representative. Bielski gave the individual remote access to his Coinbase account from which assets worth $31,039 were transferred.
- The plaintiff claimed Coinbase's customer service after the money was removed from his digital wallet was "meager and ineffective."
- Bielski sought to pursue the case as a class-action lawsuit, representing individuals who had experienced something similar with the crypto exchange.
- Coinbase moved to compel arbitration based on its user agreement, which states "any dispute arising out of or relating to this Agreement or the Coinbase Services ... shall be resolved by binding arbitration."
- The U.S. District Court for Northern California has deemed the user agreement “imposes a burdensome and unfair pre-arbitration dispute process on users and sends their complaints, but not Coinbase’s complaints, to binding arbitration."
- The "lack of mutuality" in the complaint process therefore "imposes and onerous, unfair burden" on the party bringing it, according to the court. Therefore, the court found the arbitration agreement "unconscionable and ... unenforceable."
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