US Supreme Court Rules on Coinbase’s Sweepstakes Dispute

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The United States Supreme Court has invalidated Coinbase's user agreement, allowing district courts to resolve disputes related to Dogecoin sweepstakes. Cryptocurrency exchange Coinbase launched a Dogecoin sweepstakes promotion in June 2021, but the user agreement contained conflicting clauses regarding dispute resolution. Coinbase preferred arbitration for financial disputes, while users favored court intervention. Both options were stated separately in the platform's agreements.

What is Happening on the Coinbase Front?

On May 23, the US Supreme Court ruled that state and federal courts would have sole jurisdiction over disputes related to Coinbase's sweepstakes promotion. The Court's decision included the following statement:

"We concluded that the court, not the arbitrator, should decide whether the parties' initial agreement was invalidated by the second agreement. The Ninth Circuit's decision is affirmed."

In a concurring opinion, Judge Neil Gorsuch, nominated by President Donald Trump in 2017, emphasized that arbitration is a matter of contract and stated:

"Parties 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 ultimately rejected Coinbase's previous claims that the Court's approach could invite chaos by facilitating challenges to delegation provisions. The decision stated that the Court did not believe such chaos would ensue. In the US, courts do not have the authority to intervene in disputes if contracts contain only an arbitration clause.

Details Draw Attention

However, when users agree to two contracts, the court must decide which contract is valid. Coinbase recently experienced a major outage affecting its trade services on mobile and desktop applications.

Coinbase Support's official X account posted about the outage on May 14. The account stated that Coinbase was investigating the issue and working on a solution. The account also reiterated that users' funds were safe. During the outage, many users encountered a 503 Service Temporarily Unavailable error message on the website. According to a developer guide on Mozilla, the most common reason for this error is that the servers are either down for maintenance or overloaded.

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