US courts to handle Coinbase Dogecoin sweepstakes disputes

May 24, 202408:07 UTC

The United States Supreme Court has overridden Coinbase’s user agreement, allowing district courts to settle sweepstakes disputes involving Dogecoin rewards.

Crypto exchange Coinbase launched a Dogecoin DOGEUSD sweepstakes promotional event in June 2021, but the user agreement had conflicting clauses regarding dispute resolution.

Coinbase preferred arbitrators to resolve financial disputes, while users favored court intervention. Both options were separately outlined in the platform’s agreements.

On May 23, the U.S. Supreme Court ruled that state and federal courts will have sole jurisdiction over controversies regarding Coinbase’s sweepstakes promotion.

“We conclude that a court, not an arbitrator, must decide whether the parties’ first agreement was superseded by their second. The Ninth Circuit’s judgment is affirmed.”

In tandem, Justice Neil Gorsuch, nominated by President Donald Trump in 2017, highlighted that arbitration is a matter of contract. He added:

“Parties (crypto exchanges and users) can agree by contract that an arbitrator, rather than a court, will resolve threshold arbitrability questions as well as underlying merits disputes.”

The Supreme Court finally refuted Coinbase’s previous claims that the court’s approach could “invite chaos” by facilitating challenges to delegation clauses. “We do not believe that such chaos will follow,” the ruling added.

Courts in the U.S. are not authorized to intervene in disputes when contracts contain an arbitration clause only.

However, when users agree on two contracts — one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts — a court must decide which contract governs.

Coinbase recently suffered a major outage that impacted its trading services mobile and desktop applications.

Coinbase Support’s official X account posted about the outage on May 14. It said it was investigating the issue and working on a solution. The account reiterated that users’ funds were safe.

Cointelegraph visited the website, which showed a “503 Service Temporarily Unavailable” error message. According to a developer guide found on Mozilla, the most common cause is that the servers are down for maintenance or that is overloaded.