Coinbase loses Supreme Court arbitration case in 2021 Dogecoin victory

On Thursday, the U.S. Supreme Court ruled against Coinbase Inc. in an arbitration dispute over the 2021 Dogecoin (DOGE) winnings. (COIN) passed a unanimous decision.

The 9-0 ruling made it clear that when parties are governed by multiple contracts, a court must decide which legal agreement takes precedence.

The Supreme Court upholds the jurisdiction of the lower courts

“The question of whether these parties have agreed to arbitrate can only be answered by determining which clause applies,” Judge Jackson wrote. “In examining the conflict between the representation clause in the first contract and the forum selection clause in the second, the question is whether the parties agreed to submit the dispute to arbitration – and, as usual, that question must be answered by the court.”

Coinbase previously sought to arbitrate the dispute based on user agreements that mandate arbitration for all customers. However, a federal judge ruled in November that California's court system as the forum for related disputes took precedence over customer agreements.

A recent Supreme Court decision affirmed that a lower court should decide which treaty governs this case. Judge Jackson rejected Coinbase's argument that ruling against them would create widespread legal confusion and force parties away from arbitration agreements. “We don't believe such chaos is coming,” they wrote.

Richard Silberberg, an arbitration attorney at Dorsey & Whitney, confirmed that the decision was “not very surprising” given the previous rulings.

He pointed out that because the scope of the case is narrow, it will have limited applicability in future cases related to arbitration.

Arbitration dispute

Last year, Coinbase won a separate arbitration case backed by conservatives on the court. In response to the recent decision, Coinbase Chief Legal Officer Paul Grewal commented on X, “Some will win. You will lose some of them. We appreciate the opportunity to present our case to the court and the court's ruling on this matter.

What a week. Some will win. You will lose some of them. We appreciate the opportunity to present our case to the court and the court's consideration of this matter.

— paulgrewal.eth (@iampaulgrewal) May 23, 2024

The original lawsuit, launched by former Coinbase user David Susky, alleges that the exchange misled participants of its “Trade Doge, Win Doge” contest by stating that a $100 purchase or sale of Dogecoin was required to receive cash prizes.

However, the contest's fine print featured an alternative method of entry by mail, obviating the need for a purchase while complying with the US winnings rules. Susky and the other plaintiffs argue that if they had known about this loophole, they would not have spent $100 dollars on DOGE.