The Supreme Court of the United States is ruling 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 user agreement must be determined through the court system.
As stated by Justice 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 actually agreed to arbitrate those disputes. Here, then, before either the delegation provision or the forum selection clause can be enforced, a court needs to decide what the parties have agreed to.”
The controversy stems from Coinbases’s 2021 Dogecoin sweepstakes, which appears to have conflicting rules when compared to the crypto exchange’s user agreement.
According to the court document, Coinbase’s user agreement, which users need to agree to before creating an account, stipulates that matters of dispute be settled through arbitration. However, the rules for the DOGE sweepstakes say that all disputes must be solved through California’s court system.
Eventually, a class action lawsuit was filed against Coinbase, alleging that the sweepstakes was in violation of the law. The crypto exchange then went to resolve the dispute via arbitration as per its user agreement, however, a District Court denied the motion and The Ninth Circuit, an appellate 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 have to ultimately decide on what was actually agreed to.
“Homing in on the conflict between the delegation clause in the first contract and the forum selection clause in the second, the question becomes whether the parties agreed to send the given dispute to arbitration. And that question must be answered by a court.”
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