NY Federal Court Orders Dispute With Digital Currency Exchange to Arbitration
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The Eastern District of New York has ordered a negligence case that was filed against a digital currency exchange to arbitration. In Sultan v. Coinbase, Inc., No. 18-934 (E.D.N.Y., January 24, 2019), a man, Sultan, signed up for an online account with Coinbase, Inc. The company operates as a broker for a variety of digital currencies such as Bitcoin and Ethereum in more than 30 nations. As part of creating his account, Sultan checked a box stating he agreed to Coinbase’s User Agreement and Privacy Policy. The User Agreementcontained a binding arbitration clause and class action waiver.
Later, Sultan purportedly called Coinbase’s customer support number in order to discuss a pending transaction related to his account. Instead, however, Sultan spoke to a third party hacker who allegedly stole approximately $200,000 worth of digital currency from Sultan using the information he provided during the telephone call. After learning of his financial loss, Sultan pursued a negligence lawsuit against Coinbase in the Eastern District of New York. In response to Sultan’s complaint, Coinbase filed a motion to compel the dispute to arbitration based on the terms of the company’s User Agreement.
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