The United States Supreme Court has invalidated Coinbase’s user agreement, granting district courts the authority to resolve sweepstakes disputes related to Dogecoin rewards.
In June 2021, cryptocurrency exchange Coinbase launched a promotional event for Dogecoin sweepstakes. However, the user agreement contained conflicting clauses regarding the resolution of disputes.
Coinbase preferred financial disputes to be resolved through arbitration, while users preferred court intervention. Both options were clearly outlined in the platform’s agreements.
On May 23, the U.S. Supreme Court made a ruling stating that state and federal courts will have exclusive jurisdiction over controversies regarding Coinbase’s sweepstakes promotion.
Additionally, Justice Neil Gorsuch, who was nominated by President Donald Trump in 2017, emphasized that the use of arbitration is a contractual matter. He further stated that the court’s approach would not lead to chaos, refuting Coinbase’s previous claims.
In the United States, courts are not authorized to intervene in disputes when contracts contain only an arbitration clause. However, if users agree to two contracts—one directing arbitrability disputes to arbitration and the other explicitly or implicitly sending such disputes to the courts—a court must determine which contract governs.
In other news, Coinbase recently experienced a significant outage that affected its trading services on both mobile and desktop applications. The company’s official support account, Coinbase Support’s official X account, acknowledged the issue on May 14 and assured users that their funds were secure. The website displayed a “503 Service Temporarily Unavailable” error message, indicating that the servers were either undergoing maintenance or were overloaded.
Coincidentally, the Securities and Exchange Commission (SEC) is currently facing a fierce battle against the legal firepower of the cryptocurrency industry, comparable to the epic showdown between Godzilla and Kong.