Sunday, November 5, 2023

SCOTUS to decide Coinbase Arbitrability

Last week, the U.S. Supreme Court granted cert and agreed to hear a cryptocurrency case that would move a dispute with users of a cryptocurrency exchange out of courts and into private arbitration. At issue is whether upon creating their Coinbase accounts, users agreed to resolve disputes through arbitration. A subsequent agreement related to a Dogecoin sweepstakes stipulated that any issues related to the contest must be addressed in state court. Users later accused Coinbase of violating California’s false advertising law by luring them into a sweepstakes offering Dogecoin prizes so they brought a class-action lawsuit in federal court. A federal district judge in California refused Coinbase's request to enforce arbitration, as the company argued its user agreements required. The Ninth Circuit Court of Appeals affirmed the trial judge's decision. In a related dispute last summer, the U.S. Supreme Court ruled 5-4 in favor of Coinbase. In that case, the justices supported Coinbase’s request to suspend customer lawsuits while seeking appeals to move disputes from courts to private arbitration. The review of the current case will likely impact the current status of arbitrability decisions by courts verus arbitrators and the utilization of arbitration clauses and enforcement of user agreements, especially in digital currency trading. When parties enter into successive contracts, and the first contains an arbitration agreement with a delegation clause but the second does not, who decides whether the first contract’s arbitration agreement governs any later disputes? This may finally resolve a regional circuit split. See more here-- and and