On Thursday, May 7, 2026, the United States District Court for the Southern District of New York granted Coinbase’s request to dismiss certain customer claims and to send the remainder to arbitration, ruling that most disputes fall under a broad arbitration agreement and that related securities claims were untimely and insufficiently pleaded.

In an opinion by United States District Judge Jed S. Rakoff, the court addressed lawsuits brought by Joel Heabeart and other Coinbase customers. The plaintiffs alleged losses connected to Coinbase’s May 2022 suspension of trading in WLUNA, a token tied to the LUNA ecosystem. The court noted that Coinbase Global, Inc. is the parent company of Coinbase, Inc., and that Coinbase CEO Brian Armstrong was named among the defendants.

The judge said the parties’ User Agreement included a sweeping arbitration clause that generally requires arbitration of customer claims, with an exception limited to certain securities-law disputes. While plaintiffs argued the agreement should not be enforced, the court found their unconscionability allegations to be conclusory and lacking supporting facts. As a result, non-securities claims—including claims brought under RICO, for breach of contract, and for unjust enrichment—were required to proceed in arbitration.

The decision also rejected the plaintiffs’ securities fraud allegations. The court held that the claims filed in May 2025 were barred by the statute of limitations because the alleged misrepresentations were discoverable by May 2022, when WLUNA trading was suspended following the Terra blockchain collapse.

Judge Rakoff further ruled that the securities allegations failed to satisfy the heightened pleading requirements of the Private Securities Litigation Reform Act. The plaintiffs did not identify specific false statements with the required particularity, did not adequately plead scienter, and did not establish reasonable reliance, particularly in light of what the court described as obviously erroneous account statement information.

The securities counts were dismissed with prejudice, and the remaining claims were stayed pending arbitration.

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