The US Supreme Court has ruled against the leading U.S. crypto exchange Coinbase in a high-profile dispute involving a 2021 Dogecoin sweepstakes, dismissing the crypto exchange’s concerns that a ruling against it would lead to legal chaos. In a unanimous decision delivered by Justice Ketanji Brown Jackson on Thursday, the court declared that a court, not an arbitrator, should determine the appropriate venue for resolving the dispute.
Bloomberg Law reports, that Justice Jackson emphasized that arbitration is fundamentally a matter of “contract and consent.” When conflicting contracts are involved, it is up to a court to discern the parties’ agreements. The court rejected Coinbase’s argument that such a ruling would disrupt the legal landscape by encouraging challenges to arbitration agreements. “We do not believe that such chaos will follow,” the court asserted.
The case centers around a Dogecoin sweepstakes, where consumers claimed they were misled into paying $100 to participate. The dispute arose due to the existence of two conflicting contracts. One general user agreement mandated arbitration for all disputes, while a separate sweepstakes-specific agreement required disputes to be brought to a court in California.
Justice Jackson noted that in scenarios where contracts point in different directions, it is the court’s role to determine which contract takes precedence. However, the justices did not address whether the US Court of Appeals for the Ninth Circuit correctly ruled that the sweepstakes-specific contract superseded the general user agreement. “That issue is outside the scope of the question presented, and we do not address it,” the court stated.
In a concurring opinion, Justice Neil Gorsuch reinforced the contractual basis of arbitration, noting that outcomes depend on the specific agreements made by the parties. “Like everything else in this area, it depends on what the parties have agreed to,” Gorsuch wrote.
This case marks its second appearance before the Supreme Court. In 2023, the justices ruled in Coinbase, Inc. v. Bielski that trial court proceedings should be paused while the arbitration question was resolved.
The case, Coinbase, Inc. v. Suski, U.S., No. 23-3, continues to underscore the complexities and legal nuances of arbitration agreements within the rapidly evolving crypto industry.
