The United States Supreme Court has taken up a legal dispute concerning cryptocurrency exchange Coinbase and its users. The primary issue at hand is a procedural matter that will determine whether a judge or an arbitrator should decide which contract governs disputes between Coinbase and its users.
This legal dispute is rooted in conflicting agreements between the parties. Coinbase initially implemented arbitration clauses in its user agreements. However, complications arose with a sweepstakes agreement that directed dispute resolution to California courts. Customers, alleging deceptive advertising, pursued legal action through a class-action lawsuit, seeking courtroom litigation instead of Coinbase’s usual arbitration process.
Coinbase’s attempts to enforce arbitration clauses faced opposition in lower courts. A federal judge in California, supported by the U.S. Court of Appeals for the Ninth Circuit, ruled in favor of the sweepstakes agreement, deciding that courtroom resolution should prevail, effectively rejecting Coinbase’s request to move the dispute to arbitration.
This development comes despite a recent Supreme Court decision that narrowly favored Coinbase in a related case. In that instance, the court supported Coinbase’s efforts to pause customer lawsuits while seeking arbitration.
The Supreme Court’s decision to take up this case is significant for firms that use arbitration clauses in their user agreements. It underlines the court’s ongoing involvement in defining the distinctions between arbitration and legal proceedings. The verdict in this case will likely have implications for the formulation and enforcement of user agreements, particularly in the dynamic realm of digital currency trading.