Issue 6: A Canadian’s Failed Attempt to Sue Coinbase Reveals Big Legal Risks Hidden in User Agreements (Shirodkar v. Coinbase)
Can Canadian crypto users sue global platforms like Coinbase while in Canada? A recently decided case dives deep into cross-border crypto litigation.
Suing a global crypto giant like Coinbase sounds simple until you learn your case might land in another country. This post unpacks a fascinating Canadian lawsuit, between Shirodkar v. Coinbase Global, Inc., that reveals how user agreements, jurisdiction clauses, and fine print can completely reshape where and how you get justice. Whether you trade crypto casually or daily, this case might just change the way you click “I agree” when buying crypto.
🏛️ Court: Court of Appeal for Ontario
🗓️ Judgment Date: 24 March 2025
🗂️ Case Number: 2025 ONCA 298
⚖️ Legal Issues Explained
Imagine you buy Bitcoin or another cryptocurrency online through a global company like Coinbase in Ontario, Canada. Later, you realize something went wrong. Maybe the company didn't follow local laws, or your rights weren't protected as they should have been.
Now, here's the tricky part: can you sue the company here in Ontario 🇨🇦, or do you have to fly halfway across the globe to e.g., Ireland or somewhere else to get justice?
That's exactly the legal puzzle in this case.
The main legal question is whether Ontario courts have the right (or “jurisdiction”) to hear disputes involving international cryptocurrency platforms operating mostly online.
Specifically, the court must decide if simply accessing a global website from your computer in Canada is enough to make Ontario the proper jurisdiction for your lawsuit.
Also, does signing online user agreements, which usually have fine print saying disputes must be settled in another country, prevent you from taking legal action locally?
These legal issues affects anyone using international websites or apps to trade crypto assets.
💡 Material Facts from Shirodkar v Coinbase Case
🔹 Shantanu Shirodkar, the plaintiff, used Coinbase, a popular global platform for buying and selling cryptocurrencies like Bitcoin and Ethereum. Initially, Shirodkar opened his Coinbase account while living in France 🇫🇷, signing an agreement with Coinbase UK Ltd, which is now dissolved and not involved in this lawsuit.
🔹 Shirodkar made his last transaction from France on October 23, 2019, and later moved to Canada 🇨🇦. Once in Canada, he continued using Coinbase by signing new agreements, first with Coinbase Europe based in Ireland 🇮🇪, and then with Coinbase Canada. He used his computer in Ontario to perform these crypto transactions.
🔹 Coinbase has different branches globally, including Coinbase Global and Coinbase Inc. based in the USA 🇺🇸, Coinbase Europe in Ireland, and Coinbase Canada. These entities have separate user agreements for customers in different regions.
🔹 In late 2022, Shirodkar started a class-action lawsuit 🧑⚖️ against Coinbase and its related companies. He claimed Coinbase violated Ontario securities laws 📜 by not properly registering or disclosing essential information to Canadian users who purchased cryptocurrency assets between October 2019 and the present.
🔹 Coinbase argued back, stating that Ontario courts shouldn't handle the case because Shirodkar’s agreements were primarily with Coinbase Europe, which specified that disputes must be addressed in Ireland or the UK 🇬🇧. Coinbase Canada was relatively new and had minimal involvement in Shirodkar’s transactions.
🔹 By 2023, Coinbase Canada officially began providing services to Canadian users, including Shirodkar. He eventually accepted a new user agreement with Coinbase Canada, which stated Ontario courts could handle disputes.
🔹 Coinbase Canada applied to Ontario securities regulators and was granted limited registration, allowing it to operate without the standard prospectus requirements (which usually inform investors about risks).
🔹 Coinbase asked Ontario courts to dismiss the lawsuit, claiming Ireland was a better place to handle the dispute since Coinbase Europe was the main entity involved in Shirodkar’s cryptocurrency transactions.
👨🏽⚖️ Final Judgment
After reviewing all arguments and evidence, the Ontario Court of Appeal 🏛️ made its final decision:
♦️ The court agreed with Coinbase that Ontario 🇨🇦 was not the proper location to handle this case. They decided that most of Shirodkar’s crypto transactions occurred through Coinbase Europe, based in Ireland 🇮🇪, making Ireland a more appropriate place for the lawsuit.
♦️ Coinbase Canada, although located in Ontario and providing services to Canadians, had very minimal involvement with Shirodkar’s specific cryptocurrency activities.
♦️ The court stated clearly that the user agreements signed by Shirodkar required disputes to be resolved in specific locations like Ireland or the UK 🇬🇧, reinforcing the importance of those online agreements.
♦️ Due to these points, the court dismissed Shirodkar’s attempt to have Ontario courts hear the class-action lawsuit against Coinbase Global, Coinbase Inc., and Coinbase Europe. It also paused (or stayed) any remaining action against Coinbase Canada, suggesting it could be refiled in Ireland.
♦️ As a result, Shirodkar and other affected Canadian Coinbase users would now have to pursue their legal claims overseas if they chose to continue the case.
📌 Legal Principles Gained from Shirodkar v. Coinbase 📌
The Shirodkar v. Coinbase case sheds light on several crucial legal principles relevant to crypto investors and the broader community:
🔸 Jurisdiction and Online Platforms 🌐⚖️: A key legal principle from this case is that simply using an international platform does not automatically grant jurisdiction to your local courts. Courts analyze factors such as the location of business operations, the specificity of agreements, and the primary places where services are delivered. Thus, international platforms clearly specifying jurisdictional clauses typically prevail.
🔸 Forum Non Conveniens 🚩: This legal principle allows courts to decline jurisdiction if another location is more suitable for resolving the dispute. Courts consider convenience, where the main activities occurred, and where relevant evidence and witnesses reside. This ensures fairness and practicality, preventing unreasonable burdens on defendants and judicial systems.
🔸 Retroactive Application of Agreements 🕒: The court analyzed whether a user agreement signed later could retroactively apply to earlier disputes. This case clarified that while agreements can apply to previous interactions, they generally cannot extend jurisdiction to third parties not explicitly named in the agreement.
🔸 Corporate Structure Matters 🏗️: Crypto companies often use complex corporate structures involving multiple subsidiaries internationally. This legal structure can limit liabilities and affect jurisdictional questions. The court emphasized treating each subsidiary as a separate legal entity unless explicitly stated otherwise in contracts.
🔸 Consumer Protection 📢🛡️: Though platforms may recognize the right to sue under local consumer protection laws, this does not necessarily extend jurisdictional rights to other related disputes. Consumer protection provisions must be clear and specific to have jurisdictional relevance.
🔸 Regulatory Engagement ≠ Consent 📝🚫: Engagement with local regulators does not automatically mean a company consents to jurisdiction in that area. Companies often engage with multiple jurisdictions due to regulatory compliance requirements, but this doesn't equate to agreeing to local judicial authority over disputes.
🔸 Importance of the "Real and Substantial Connection" Test 🔍: The court applied the "real and substantial connection" test from Canadian jurisprudence (Van Breda case), clarifying that the mere act of accessing online services locally is generally a weak connection. Stronger connections involve more substantial activities, such as conducting business operations or hosting servers in the jurisdiction.
🔸 Role of Expert Evidence in International Disputes 🎓👨💼: The court relied on expert evidence to determine the suitability of an international forum. Expert opinions significantly influenced the court’s decision to recognize Ireland as a more appropriate location.
🔸 Impact on Access to Justice ⚖️🚪: The decision highlights concerns about access to justice when litigants must pursue international litigation. The court balanced these concerns against practicalities of the case, reaffirming that jurisdictional decisions prioritize efficiency, practicality, and fairness.
📌 Lessons and Impact for Crypto Investors
✅ Understand User Agreements Carefully 📜: Always read the terms and conditions carefully, especially regarding jurisdiction clauses. Platforms usually specify exactly where legal issues must be resolved, often in places far from your home country.
✅ Jurisdiction Matters 🌍: This case teaches crypto investors that accessing global platforms doesn’t necessarily allow local courts to handle disputes. Investors must be prepared to pursue legal action internationally if required.
✅ Complexity of Global Companies 🏢: Many cryptocurrency platforms operate through various international subsidiaries. Find out which entity you are interacting with, as this can impact where and how you can seek legal remedies.
✅ Costs and Complexity 🛂💸: Pursuing legal action internationally is often costly and complicated. Investors should consider potential hurdles and weigh them against the benefits of using international crypto platforms.