The U.S. Supreme Court has granted consideration to a case involving cryptocurrency exchange platform Coinbase’s attempt to move a dispute with its users out of the courtroom and into private arbitration. This development follows a lower court ruling that Coinbase had effectively forfeited its right to seek arbitration in a dispute arising from a 2021 sweepstakes that users claimed was based on false advertising.
Businesses typically favor arbitration over litigation due to its cost-effectiveness and expediency. Litigation in the court system can be a protracted and costly process, carrying a heightened risk of substantial damage awards. The central question in this case pertains to whether the determination of which of two seemingly conflicting agreements should take precedence in the disagreement between Coinbase and its aggrieved users lies with a judge or an arbitrator. This pivotal decision will dictate whether the dispute proceeds to arbitration or litigation.
Read more: Coinbase Looks To UAE As Global Crypto Hub
Upon creating accounts on Coinbase, users consented to resolve any disputes through arbitration. However, a subsequent agreement linked specifically to the sweepstakes stipulated that conflicts arising from the contest should be adjudicated in a California court. When users accused the company of violating California’s false advertising law by enticing them to participate in a sweepstakes with dogecoin, a type of cryptocurrency, they initiated a class action suit in federal court.