Coinbase has been accused in a class-action lawsuit alleging that its arbitration policies are unenforceable. According to the plaintiff, its terms of service contain a legally unconscionable arbitration agreement.
A lawsuit has been filed against Coinbase
A class-action lawsuit has been launched against Coinbase, a popular cryptocurrency exchange company based in the United States, arguing that its arbitration policies are unenforceable. In a recent court filing, a plaintiff contends that Coinbase’s arbitration provision in its terms of service is legally unreasonable because it greatly favors one party.
According to California law, “substantial unconscionability refers to the fairness of an agreement’s true terms, which determines whether they are overly harsh or one-sided.”
The plaintiff, who desires to represent a group of people in a similar scenario, requested arbitration after a scammer took more than $31,000 from his Coinbase account but found Coinbase unresponsive and the terms unfair, according to the court petition.
A contract clause is invalid under California law if it was ‘unconscionable at the time it was made.’ … [The plaintiff] does not argue that when he signed up for his user account, he consented to be bound by the Coinbase user agreement in effect, nor that it addresses the dispute.
Instead, he claims that the arbitration agreement is unconstitutional since it lacks any semblance of bilaterality.
According to court records, Coinbase sought to force arbitration, but Judge William Alsup dismissed the request, ruling that the “broader arbitration provision [is] unconscionable.”
Coinbase was slammed with a new class-action complaint last month, alleging that they offered crypto assets as unregistered securities.
According to three individuals, the crypto exchange platform has been trading digital assets without registering them with the US Securities and Exchange Commission since October of 2019.
According to the Securities Act of 1933, all securities or assets that can be traded between parties and on the open market must be registered with the SEC. Based on the Howey Test, the conventional approach for determining whether an asset is a security or not, the litigation contends that Coinbase’s virtual assets can be classified as securities.
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