More cryptocurrency disputes continue to emerge
More cryptocurrency disputes continue to emerge
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An opinion from federal court in New York City details a dispute surrounding cryptocurrency exchange Bittrex’s arbitration clause, but since it will be resolved privately, the analysis may never be made public.

 

The plaintiff alleges Bittrex suspended her account and withheld her deposited funds unless she signed away her right to sue the exchange.

 

Bittrex alleges this is false, and the plaintiff failed to provide evidence of source funds, which is required on both the state and federal level

 

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are their opinions only

 

Details

 

The plaintiff is a New York resident with a Bittrex account. The lawsuit names Bittrex CEO Bill Shihara, along with the corporation as defendants. (Presumably, Defendants will ask for dismissal of Mr. Shihara during the arbitration.

In most cases like this one, a corporate officer is protected from personal liability by the corporate shield).

According to the opinion, when plaintiff registered, she agreed to the terms of service that included an arbitration clause.

The first page of the terms stated in all capital letters that the Arbitration clause contained within in it “governs resolution of certain disputes and waives any right to trial by jury or to participate in a class action.”

 

Plaintiff alleges that she deposited $120,000 with Bittrex in August 2018 and that “Bittrex suspended her account and attempted to extort her by withholding the funds she had in her account unless she” signed an agreement releasing her rights to sue Bittrex and that it did not release her funds until November 18, 2019.

 

Bittrex says that it isn’t true and that the plaintiff refused to provide evidence of source of funds as required by N.Y. state and U.S. federal law.

 

Defendants moved to compel arbitration or transfer the case to federal court in Seattle. Plaintiff didn’t respond to the motion which (unsurprisingly) the Court granted.

 

Even though there was no response, the Court analyzed the enforceability of the arbitration clause and found that the clickwrap agreement here was enforceable.

 

clickwrap agreement, also known as a clickthrough agreement, is an online contract that confirms a user’s consent to a company’s terms and conditions. This type of contract is a substitute for a real signature and is often used to enforce software licenses or authorize online transactions.

 

According to the court, “when [Plaintiff] originally signed up for her user account, she checked a box to indicated that she accepted the Terms of Service, including the mandatory arbitration clause.”

 

Also, whether the dispute here is covered by the arbitration clause is ultimately to be determined by the arbitrator.

 

One imagines an uphill battle convincing an arbitrator that (if we assume Bittrex’s argument is correct) that requiring documentation of source of funds is somehow unlawful, if required by state and federal law. One also wonders what the plaintiff’s damages calculation will be.

 

Given the fact that this will be resolved in arbitration, which will be private, that analysis may never see the light of day. With that said, this case joins a number of others that confirm the enforceability of arbitration clause in cryptocurrency currency exchange terms of service.

 

Source: theblockcrypto.com

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