Reed Smith Client Alerts

Key takeaways

  • For crypto asset platforms, establishing an enforceable arbitration clause in their terms of service is of paramount importance. Given that the number of user and collaborator disputes are on the rise in this asset class, platforms need a workable and predictable framework to resolve them.
  • However, an arbitration agreement might be unenforceable where it is seen as not properly incorporated into the terms of service, or incompatible with local statute providing for litigation of such disputes.
  • In this case, the Southern District of New York rejected both grounds put forth by a user of a crypto asset platform who sought to circumvent arbitration.
  • The court found the arbitration agreement, within the terms of service linked on the platform’s sign-up page, was sufficiently conspicuous, and acknowledged the existence of legislation permitting class action litigation for securities claims.
  • The case serves as a useful reminder to platform operators about the importance of fully incorporating terms of service into their platforms.


In 2020, the plaintiff (Hastings) opened three accounts with the crypto asset platform Nifty Gateway, managed by the defendants, Nifty Gateway LLC and the Gemini Trust Company (collectively Nifty).

At that time, the Nifty Gateway Terms & Conditions (Terms) contained an arbitration agreement requiring users to arbitrate disputes, including disputes concerning “any product sold or distributed through” the platform, with Nifty Gateway.

The agreement also contained a “delegation clause” expressly providing that the arbitrator shall have exclusive authority to determine the scope and enforceability of the arbitration agreement and resolve any dispute related to its interpretation, applicability, enforceability, formation and voidability.

The Terms were brought to the user’s attention in a modified “click wrap” agreement. The account creation page required prospective users to provide their name, email, username and password, and click a “Sign Up” button, to complete the account-creation process. Below this “Sign Up” button was a hyperlink to the Terms and a statement that “By signing up, you agree to the Term[s] and Conditions and Privacy Policy."

Between February and April 2021, Hastings purchased non-fungible tokens (NFTs) from Nifty Gateway. There followed the well-publicised market crash in which the value of crypto assets fell dramatically. In December 2022, Hastings brought a putative class action against Nifty, alleging that Nifty Gateway violated federal securities law by selling NFTs on its platform.

In March 2023, Nifty moved to compel arbitration and stay the action pending the outcome of arbitration under the Federal Arbitration Act.