- Coinbase is fighting to move a dispute with users from court litigation to private arbitration
- The dispute stems from a 2021 dogecoin sweepstakes promotion that some users accused Coinbase of false advertising about
- The Supreme Court will decide whether an arbitrator or judge determines which contract controls the dispute, impacting if arbitration or litigation proceeds
The U.S. Supreme Court has agreed to review Coinbase’s effort to move a dispute with users into private arbitration instead of court litigation. This case could have broad implications for how companies handle consumer complaints.
Background on the Coinbase Dispute
In 2021, Coinbase held a sweepstakes promotion that offered prizes in dogecoin cryptocurrency. Some users later accused Coinbase of false advertising related to the contest. These users brought a class action lawsuit in California federal court.
Coinbase Seeks Arbitration Under User Agreements
Companies often prefer arbitration over litigation because it is faster, cheaper, and poses less risk. Upon opening accounts, Coinbase users agreed to arbitrate any disputes. But the sweepstakes agreement said contests would be heard in California court.
When users sued, Coinbase asked the court to compel arbitration per the user agreements. The judge refused, and an appeals court affirmed that decision.
Supreme Court to Decide Arbitrator vs Judge Question
The key issue is whether an arbitrator or judge should determine which contract controls in this dispute. That decision would dictate if the case proceeds in arbitration or litigation.
In June, the Supreme Court ruled in Coinbase’s favor in a similar dispute, halting lawsuits while the company sought arbitration. The new case asks the Court to provide clarity on arbitration rights more broadly.
The Supreme Court’s eventual ruling could have lasting impacts on how companies like Coinbase handle consumer complaints. For now, the dispute heads to the high court for review.
