- Coinbase wants to take a dispute with users out of court into private arbitration
- Private arbitration is quicker and cheaper, the risk is lower
- Users were tricked into taking part in a contest with prizes in Dogecoin
The US Supreme Court has agreed to hear Coinbase’s appeal in a case involving false advertising charges against the leading crypto exchange, Reuters reported.
Coinbase is trying to take a dispute with former customers out of court into private arbitration, which companies often prefer. The exchange is also struggling with liquidity issues.
After a lower court ruled Coinbase had waived its right to arbitration, the exchange will be taking its appeal to the Supreme Court. The issue at hand involves a 2021 competition, which users allege constituted false advertising.
A faster and cheaper process
Most businesses would rather take disputes to private arbitration because it is quicker and cheaper than in-court lawsuits, which carry a more pronounced risk of damages and are often harder to fight.
Coinbase and former users are disputing over two seemingly conflicting agreements, and the arbitrator or judge must decide which one will take priority. The decision about the prevailing agreement will determine where the dispute will proceed.
When a customer opens an account with Coinbase, they agree to resolve any potential disputes with the exchange via arbitration. A follow-up agreement specifically relating to the competition in 2021 stated that a court in California would hear disputes over it.
Users duped into accepting prizes in DOGE
Users brought a class action suit in a federal court of law over accusations that Coinbase had broken the Golden State’s false advertising law. They claim the exchange tricked them into paying to take part in a contest that offered prizes in Dogecoin.
The 9th US Circuit Court of Appeals affirmed a ruling by a federal judge in California, who rejected Coinbase's appeal to move the dispute.
In a June hearing, justices ruled in Coinbase's favor in a similar dispute. They endorsed the exchange's bid to suspend user lawsuits while it filed appeals to move the disputes out of court and into private arbitration.
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