In a recent ruling that could have implications for the crypto industry, the US Supreme Court unanimously sided against US-based cryptocurrency exchange Coinbase, over a 2021 Dogecoin (DOGE) sweepstakes dispute.
The court’s decision, delivered by Justice Ketanji Brown Jackson, dismissed Coinbase’s argument that a ruling against it would invite legal turmoil, emphasizing the importance of contractual agreements and the role of courts in resolving disputes.
Coinbase Arguments Dismissed
The key issue was whether the dispute should be submitted to arbitration or litigated in court. According to Bloomberg Law, the court emphasized that arbitration requires the consent of the parties and that in cases involving conflicting contracts, the court must determine the parties’ intent.
Coinbase had contended that a ruling against it would “create chaos” by encouraging parties to challenge arbitration agreements. However, the court rejected this concern, stating that it did not foresee such chaos arising from its decision.
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The case revolved around a sweepstakes in which consumers alleged they were deceived into paying $100 to participate. The conflict emerged due to the presence of two contracts that pointed to different dispute resolution mechanisms.
David Suski and others who participated sued the exchange and the company that ran the Dogecoin sweepstakes.
They alleged violations of California’s false advertising law, unfair competition law, and the Consumer Legal Remedies Act.
While a general user agreement mandated arbitration for all disputes, a sweepstakes-specific contract stipulated that disputes must be brought before a California court.
Varying Outcomes In Future Cases?
Justice Jackson highlighted the need for a court to determine which contract should govern the resolution of the dispute in such situations.
However, the court refrained from addressing whether the Ninth Circuit Court of Appeals correctly determined that the sweepstakes-specific contract “superseded” the general user agreement, deeming it beyond the scope of the question presented.
Justice Neil Gorsuch provided a concurring opinion, emphasizing the contractual nature of arbitration and suggesting that different facts could yield a different outcome. He noted that the enforceability of arbitration depended on the parties’ agreement.
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Coinbase’s Chief Legal Officer, Paul Grewal, reflected on the ruling,…
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