Coinbase Loses Arbitration Dispute in Supreme Court, Users Accuse the Exchange of False Advertising

Coinbase, the leading US exchange, has suffered a defeat in the Supreme Court, losing its arbitration dispute that revolves around a Dogecoin sweepstakes.

Coinbase Legal Loss: Supreme Court Rejects Exchange’s Arbitration Bid in Dogecoin Sweepstakes Case

Coinbase suffered a legal setback on Monday after the US Supreme Court ruled against the cryptocurrency exchange in a dispute over a Dogecoin sweepstakes that went awry.

A group of users had accused the trading platform of false advertising, claiming they were misled into paying $100 to enter the sweepstakes, sparking a legal battle that reached the highest court in the land.

Coinbase’s top lawyer, Paul Grewal, took to Mastodon X to comment on the ruling, writing: “What a week. Some you win. Some you lose. We are grateful for having had the opportunity to present our case to the Court and appreciate the Court’s consideration of this matter.”

The crypto exchange sought to compel the users to engage in arbitration, a process typically favored by businesses as it allows for disputes to be resolved outside of court proceedings.

Coinbase users had agreed to resolve disputes through arbitration when they signed up for the exchange’s services. However, the Dogecoin sweepstakes encountered a legal hurdle as a separate agreement stated that any disputes regarding the contest would be settled in a California court. The user agreement’s arbitration provision clashed with the forum selection clause stipulated for the sweepstakes contest.

A federal judge in California and the 9th US Circuit Court of Appeals both ruled against Coinbase in the matter, leading the exchange to file an appeal with the Supreme Court.

The high court agreed to take up the dispute in November, and while the justices did not explicitly side with the 9th Circuit, they unanimously ruled that Coinbase was not entitled to compel arbitration.

Coinbase had argued that not allowing it to force arbitration would wreak havoc, but the Supreme Court was not swayed by this claim.