The United States Supreme Court has weighed in on a legal dispute involving Coinbase and its users, specifically addressing an important procedural question about whether a judge or arbitrator should decide which contract governs the disputes.
According to a Bloomberg report, this issue stems from conflicting agreements between the parties, with one contract advocating arbitration and another supporting litigation in court.
Coinbase had initially enforced arbitration clauses for its customers, but a complication arose with a sweepstakes agreement that directed dispute resolution to the California courts. Following allegations of misleading advertising, customers filed a lawsuit through a class action lawsuit, challenging Coinbase’s usual arbitration process.
Coinbase’s efforts to promote arbitration have faced opposition from lower courts. A federal judge in California, backed by the U.S. Court of Appeals for the Ninth Circuit, held that the drawing agreement, which favored a judicial resolution, should prevail. As a result, the company’s request to refer the dispute to arbitration was not granted.
Related: Coinbase cuts losses, as crypto trading volumes fall in third quarter
This judicial reluctance comes despite a recent Supreme Court ruling, which leaned 5-4 in favor of Coinbase in a related case. The court then decided to support the company’s efforts to put customer lawsuits on hold while it sought to refer the disputes to arbitration.
During this legal dispute, Coinbase remained proactive. The company has expanded its services by introducing new trading options for its users. Eligible retail customers can now engage in crypto futures trading, with more accessible contracts representing a fraction of the value of Bitcoin (BTC) and Ether (ETH).
The Supreme Court’s decision to take up this case represents a crucial development for companies using arbitration clauses. It also highlights the Court’s continued involvement in defining the distinctions between arbitration and court proceedings. The verdict will likely impact the formulation and enforcement of user agreements, particularly in the ever-changing area of digital currency trading.
Review: Samsung Bitcoin ETF Loses $700 Million, Coinbase Leaves Japan: Asia Express