The United States Supreme Court recently took up a legal dispute concerning Coinbase and its users to address a significant procedural matter — whether a judge or an arbitrator should decide which contract governs disputes.
The issue emerged from the conflicting agreements between the parties, with one contract advocating arbitration and another supporting courtroom litigation. Coinbase had tried to introduce arbitration clauses to its clients but a sweepstakes agreement directed dispute resolution to California courts, leading to a class-action lawsuit against Coinbase’s usual arbitration process.
Lower courts opposed Coinbase’s efforts to promote arbitration and a federal judge in California, backed by the U.S. Court of Appeals for the Ninth Circuit, ruled that the sweepstakes agreement should prevail, thereby denying Coinbase’s request to move the dispute to arbitration. This ruling came despite a recent Supreme Court decision that leaned 5-4 in favor of Coinbase in a related matter, which supported the company’s efforts to pause customer lawsuits while it sought to move disputes into arbitration.
Coinbase took pro-active steps to widen its services by introducing new trading options for its users. Eligible retail customers can now engage in crypto futures trading with contracts sized more accessibly, representing a fraction of the value of Bitcoin (BTC) and Ether (ETH).
The Supreme Court’s decision to take up this case is a pivotal development for firms utilizing arbitration clauses and will likely influence the formulation and enforcement of user agreements, particularly in the ever-evolving field of digital currency trading.