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

The judge ruled that a court, not an arbitrator, must decide whether Coinbase’s User Agreement, which mandates arbitration for disputes, or the sweepstakes rules, which assign jurisdiction to California courts, takes precedence.

This decision represents a setback for Coinbase, which sought arbitration. Coinbase CLO Paul Grewal briefly commented, acknowledging the mixed outcomes of legal battles and thanking the court for its consideration.

Earlier Rulings Affirmed

The Supreme Court's decision upholds earlier rulings by the US Court of Appeals for the Ninth Circuit and the Northern District of California, both of which found that the sweepstakes rules controlled the dispute and precluded arbitration.

Justice Ketanji Brown Jackson noted that arbitration is possible when both parties agree, but disagreements can arise over whether they agreed to arbitration. She dismissed Coinbase's argument that the Ninth Circuit misapplied California law, stating the Supreme Court would not address such auxiliary questions.

Jackson also clarified that the decision would not lead to chaos by allowing challenges to delegation clauses, emphasizing that courts must determine which contract governs when two agreements are involved.

Dogecoin Sweepstakes

The broader case involves a class action lawsuit against Coinbase and its sweepstakes partner Marden-Kane. Plaintiffs alleged that Coinbase misled users into buying or selling $100 or more of DOGE to enter the sweepstakes while concealing alternative entry methods. They also claimed violations of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act.