Thomas Daniels
Crypto exchange Coinbase has suffered a legal setback as the Supreme Court ruled against it in a dispute concerning its 2021 Dogecoin sweepstakes.
In the case Coinbase, Inc. v. Suski, consumers accused Coinbase of deceptive practices, alleging they were misled into paying $100 or more to enter a sweepstakes for a chance to win up to $1.2 million in Dogecoin (DOGE).
On Thursday, the Supreme Court delivered a unanimous verdict against Coinbase, determining that the dispute should be adjudicated by a court rather than an arbitrator.
Case Background
The lawsuit, spearheaded by David Suski and other entrants, claimed that Coinbase and its sweepstakes management company misled users into believing that a $100 Dogecoin purchase was required to participate. Coinbase sought to enforce an arbitration clause within its user agreement. However, the district court, supported by the Ninth Circuit, ruled that the sweepstakes terms were covered by the agreement, necessitating judicial review.
Supreme Court Ruling
Justice Ketanji Brown Jackson articulated that in scenarios involving conflicting contracts, it is imperative for a court to establish the agreed terms. “A court needs to decide what the parties have agreed to,” she asserted.
Paul Grewal, Coinbase’s Chief Legal Officer, reacted on social media platform X, stating, “What a week. Some you win. Some you lose. We are grateful for having had the opportunity to present our case to the Court and appreciate the Court’s consideration of this matter.”
The ruling, while significant, did not address broader issues within the cryptocurrency sphere, focusing instead on arbitration protocols.
Market Reaction
Following the Supreme Court’s decision, Coinbase’s stock (COIN) experienced a notable decline, dropping over 3.5% in mid-morning trading and settling at a 2.5% decrease by the end of the day.
