Bittrex Arbitration Order Overturned in Crypto-Laundering Case

A US appeals court has overturned an order requiring non-signatories to arbitrate claims against a cryptocurrency exchange.

The Eleventh Circuit Court of Appeals granted a petition for a writ of mandamus on August 19, directing the US District Court for the Southern District of Florida to vacate its March 16 order compelling nonsignatory plaintiffs to arbitrate claims against Bittrex, a cryptocurrency exchange. The plaintiffs alleged that bad actors stole their cryptocurrency assets and laundered them through Bittrex's exchange, leveraging the company's failure to comply with anti-money laundering regulations.

The court held that the plaintiffs' claims were not subject to the arbitration clause in Bittrex's Terms of Use agreement because they lacked a 'significant relationship' to the contract. The court reasoned that the plaintiffs' claims arose from violations of federal and state laws, rather than any contractual rights contained in the Terms of Use.

The 11th Circuit characterized granting a writ of mandamus as a 'drastic and extraordinary remedy,' but held it was appropriate given the plaintiffs' lack of alternative means of relief. The district court subsequently vacated its prior order on August 20, setting the matter for a status conference to proceed.