In a recent development, the United States Supreme Court has decided to take on a lawsuit related to a Dogecoin sweepstakes, which involves Coinbase and its customers. This comes almost a year after the US District Court for the Northern District of California initially denied the exchange’s motion to force the class-action lawsuit to arbitration. 

The class action, which was filed in 2021, alleged that Coinbase deliberately obscured that customers could enter its “Trade Doge, Win Doge” giveaway without having to trade $100 of the meme coin on its platform. The largest US-based crypto exchange was accused of deliberately concealing a free mail-in entry option to drive the trading volume and liquidity of Dogecoin, a new listing at the time.

Coinbase attempted to push the lawsuit out of the courtroom and into private arbitration, highlighting the arbitration clause in its user sign-up agreement. However, the federal judge ruled that the sweepstakes agreement, which favors courtroom litigation as a resolution method, superseded the sign-up contract.

On Friday, November 3, a federal judge in California, with the support of the 9th U.S. Circuit Court of Appeals, upheld the decision that a prior sweepstakes agreement, which required the matter to be resolved in a traditional courtroom setting, should be given precedence.

The class action is led by a Coinbase user, David Suski, who claims he would not have paid $100 to participate in the Dogecoin giveaway if Coinbase had adequately disclosed the free entry option. The lawsuit seeks over $5 million in damages for the sweepstakes participants who paid the $100 entry fee.

David J. Harris, Suski’s Counsel, said in a statement:

We are hopeful that the court, like every judge below, will hold Coinbase to the plain language of its own contracts with consumers.

The Supreme Court’s decision to review this case represents a game-changing moment in the crypto-legal space. This is even more so considering that large companies often favor arbitration, which is less costly and more timely than courtroom litigation. 

In another significant legal battle, Coinbase continues to fight the United States Securities and Exchange Commission (SEC) over alleged violations of securities laws. In June, the financial regulator charged the crypto company for the unregistered offering of certain crypto assets classified as securities.

In the latest development, Coinbase said in a court filing that the SEC is overstepping its authority and its definition of what qualifies as a security is too wide. This comes amidst the cryptocurrency firm’s bid to dismiss the financial regulator’s lawsuit.

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