Clause for Concern? The Jurisdictional Limits When Prosecuting Crypto Claims

Overview

Whether courts have jurisdiction over cryptocurrency disputes has been hotly contested in Ontario proceedings in past years. The Court of Appeal for Ontario’s recent decision in Shirodkar v. Coinbase Global, Inc.,¹ provides welcome guidance on the topic.

In Coinbase, the Court upheld the dismissal of a putative class action against foreign Coinbase entities and Coinbase Canada (together, Coinbase) for want of jurisdiction. The decision confirms that the ability to access a foreign trading platform within Canada is not, alone, enough for a court to exercise its jurisdiction over a foreign defendant.

Background: A Flurry of User Agreements

The plaintiff bought digital assets on Coinbase’s cryptocurrency trading platform. He sued Coinbase for losses resulting from allegedly failing to meet disclosure and registration obligations (e.g., prospectus requirements) mandated by Ontario’s Securities Act.²

Earlier, the plaintiff entered into user agreements with the foreign Coinbase entities and, separately, with Coinbase Canada. The former agreements were governed by Irish law and disputes arising from those agreements were within the jurisdiction of the Irish courts. Ontario law applied to the Canadian agreement, which stated that disputes arising from that agreement or “prior versions” were within the jurisdiction of the Ontario courts. However, the plaintiff signed the Canadian agreement after suing Coinbase in Ontario.

Coinbase asked the Court to dismiss the proceedings on jurisdictional grounds. The plaintiff’s signature on the Canadian user agreement was not enough to let him fight another day at home in Canada.

A Read and Substantial Connection Requires More Than a John Hancock

The motion judge, whose decision was upheld on appeal, found in favour of Coinbase:

• The Canadian user agreement did not bind the global Coinbase entities: The Canadian user agreement did not bind the foreign entities by virtue of the defendants’ corporate relationships. The Canadian agreement referred to Coinbase Canada as “we,” “our,” and “us.” It separately defined the “Coinbase Group” to include all affiliated companies and stated that the Canadian user agreement applied only between Canadian users and Coinbase Canada.
• Ontario did not have jurisdiction over the foreign Coinbase entities: The plaintiff failed to prove a “real and substantial connection” between the subject matter of the litigation and the forum. He relied on the foreign entities’ operations in Ontario and their alleged breaches of the Securities Act. However, the plaintiff’s transactions occurred outside of Ontario (mostly through Coinbase Europe). Despite having made trades on his computer in Ontario, he also traded in France and the impugned purchase occurred in Ireland. Further, the physical server infrastructure used to operate Coinbase was not located in Ontario.
• Ontario was not the most “convenient” forum: The Court found that it had jurisdiction over Coinbase Canada but decided that Ireland was the most convenient forum. The Court of Appeal noted that, if a plaintiff could compel Ontario courts to accept jurisdiction simply by alleging a breach of an Ontario statute, Ontario courts would have universal jurisdiction and encourage forum shopping. The plaintiff argued he would be denied access to justice because Ireland does not have a class actions regime. In response, the Court of Appeal ruled that the perceived loss of juridical advantage was outweighed by the importance of respecting other courts and legal systems (especially since Ireland maintains a comprehensive legal regime for regulating securities).

Conclusions

Merely having access to a foreign cryptocurrency trading platform in Ontario is not enough to establish jurisdiction over foreign entities. Similarly, corporate affiliation will not suffice absent other compelling factors, as jurisdiction must be rooted in a “real and substantial” connection to Ontario. The facts that prove the existence or absence of such a connection will differ from case to case. However, the Coinbase decision indicates that litigants should consider factors on a global basis, both literally and figuratively.

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¹ Shirodkar v. Coinbase Global, Inc., 2025 ONCA 298 (Coinbase).
² Securities Act, R.S.O. 1990, c S.5 (Securities Act).