Supreme Court Overrides Coinbase Agreement, Grants Courts Authority in Dogecoin Sweepstakes Disputes

The United States Supreme Court has overridden Coinbase’s user agreement, granting district courts the authority to resolve sweepstakes disputes involving Dogecoin rewards.

In June 2021, Coinbase launched a Dogecoin sweepstakes promotional event. However, the user agreement contained conflicting clauses about dispute resolution. Coinbase favored arbitration for resolving financial disputes, while users preferred court intervention. Both options were separately detailed in the platform’s agreements.

On May 23, the U.S. Supreme Court ruled that state and federal courts will have exclusive jurisdiction over controversies related to 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“We conclude that a court, not an arbitrator, must decide whether the parties’ first agreement was superseded by their second.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.”

Justice Neil Gorsuch, nominated by President Donald Trump in 2017, emphasized that arbitration is a matter of contract.

He stated, “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 dismissed Coinbase’s argument that the court’s approach could “invite chaos” by enabling challenges to delegation clauses.

“We do not believe that such chaos will follow,” the ruling added.

In the U.S., courts are not authorized to intervene in disputes when contracts exclusively contain an arbitration clause.

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

Coinbase recently experienced a significant outage affecting its trading services on mobile and desktop applications.

On May 14, Coinbase Support’s official X account reported the outage, stating that it was investigating the issue and working on a solution. The account assured users that their funds were safe.

Cointelegraph visited the website, which displayed a “503 Service Temporarily Unavailable” error message.

According to a developer guide on Mozilla, the most common cause of this error is that the servers are down for maintenance or are overloaded.

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