Supreme Court Ruling on Coinbase's Dogecoin Sweepstakes Arbitration Dispute

By: Isha Das

The US Supreme Court denied Coinbase’s motion to compel arbitration related to its Dogecoin (DOGE) sweepstakes on May 23.

The judge ruled that “a court, not an arbitrator,” must decide whether one of Coinbase’s agreements supersedes the other. The first agreement is Coinbase’s User Agreement, which states that an arbitrator will handle disputes. The second agreement is the official sweepstake rules, which contain a forum selection clause granting California courts sole jurisdiction over sweepstakes-related controversies.

The case represents a loss for Coinbase, which sought arbitration. Coinbase CLO Paul Grewal commented briefly on the outcome, writing: “some you win … some you lose,” and thanked the court for its consideration.

The Supreme Court ruling affirms an earlier decision by the US Court of Appeals for the Ninth Circuit and, in turn, a decision from the Northern District of California. Both courts found that the official sweepstake rules controlled the dispute and it was not eligible for arbitration.

Justice Ketanji Brown Jackson said that disputes can be arbitrated when both sides agree to arbitration but that parties may have a secondary disagreement about whether they agreed to arbitration. Jackson also commented on Coinbase’s contention that the Ninth Circuit courts improperly applied California state law in its earlier decisions but declined to consider auxiliary questions on the matter.

The broader dispute pertains to a class action lawsuit in which Coinbase and its sweepstakes partner Marden-Kane were alleged to have directed users to buy or sell $100 or more of DOGE to enter the sweepstakes while hiding alternative ways to participate. Plaintiffs also alleged violations under California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act.