The U.S. Supreme Court ruled against cryptocurrency exchange Coinbase in its Dogecoin (DOGE) sweepstakes.
The Supreme Court unanimously ruled that any conflict between Coinbase’s sweepstakes agreement and user agreement must be determined through the court system, according to a new legal document obtained by Cornell Law.
Judge Ketanji Brown Jackson said:
“Arbitration is a matter of contract and consent, and we have long held that a dispute is subject to arbitration only if the parties actually agree to arbitrate the dispute. If so, the court must determine what the parties agreed to before the delegation or forum selection clause can be enforced.”
The controversy stems from Coinbase’s 2021 Dogecoin sweepstakes, which appears to have conflicting rules compared to the cryptocurrency exchange’s user agreement.
Coinbase’s user agreement, which users must agree to before creating an account, stipulates that disputes be resolved through arbitration, according to court documents. However, DOGE Sweepstakes Rules require that all disputes be resolved through the California court system.
Ultimately, a class action lawsuit was filed against Coinbase, claiming that the sweepstakes violated the law. The cryptocurrency exchange attempted to resolve the dispute through arbitration under its user agreement, but the district court declined and the appellate court, The Ninth Circuit, agreed.
The Supreme Court declined to comment on whether The Ninth Circuit’s reasoning was correct, but ruled that the court must ultimately decide what it actually agreed to.
“Looking at the conflict between the delegation clause in the first contract and the forum selection clause in the second contract, the question is whether the parties agreed to submit the dispute to arbitration. And that question has to be answered by the courts.”
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