The United States Supreme Court rules against crypto exchange Coinbase in the Dogecoin (DOGE) sweepstakes dispute.
According to new legal documents obtained by Cornell Law, the Supreme Court unanimously ruled that the conflict between Coinbase’s sweepstakes contract and the user agreement must be resolved through the legal system.
As stated by Judge Ketanji Brown Jackson:
“Arbitration is a matter of contract and consent, and we have long held that disputes are subject to arbitration if, and only if, the parties have actually agreed to arbitrate those disputes. So here, before the delegation provision or the forum selection clause can be enforced, a court must decide what the parties have agreed to.”
The controversy stems from Coinbases’ 2021 Dogecoin sweepstakes, which appear to have conflicting rules compared to the crypto exchange’s user agreement.
According to the court document, Coinbase’s user agreement, which users must agree to before creating an account, stipulates that disputes will be settled through arbitration. However, the rules for the DOGE sweepstakes say that all disputes must be resolved through the California legal system.
Ultimately, a class action lawsuit was filed against Coinbase, claiming the sweepstakes were against the law. The crypto exchange then moved to resolve the dispute through arbitration under the user agreement, but a district court denied the motion and The Ninth Circuit, an appeals court, agreed.
While the Supreme Court declined to comment on whether or not The Ninth Circuit’s reasoning is correct, it did rule that a court would ultimately have to decide what was actually agreed to.
“If we look at the conflict between the delegation clause in the first contract and the forum selection clause in the second, the question arises whether the parties agreed to submit the dispute in question to arbitration. And that question must be answered by a court.”
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