Yesterday, the Supreme Court of the USA ruled that the legal dispute concerning the Dogecoin rewards of Coinbase cannot be resolved through simple arbitration, but falls under the jurisdiction of the courts.
The sentenza indeed explicitly states that it must be a court, and not an arbitrator, to decide whether the first agreement between the parties has been replaced by the second.
Summary
The dispute over Dogecoin rewards on Coinbase: the US Supreme Court declares
The dispute started even in 2021, when a certain David Suski sued Coinbase for not adequately informing him that to participate in the Sweepstakes launched by the exchange on DOGE it was not strictly necessary to purchase the tokens.
At that time, the price of DOGE had dropped from the all-time high of $0.73 in May to $0.16 two months later, when Suski sued Coinbase.
Although at that time the price of Dogecoin was significantly higher than the $0.005 with which it had started 2021, and despite in the following months it returned at least above $0.35, during 2022 it ended up falling below $0.06, exacerbating Suski’s problem.
The boom of DOGE started right in January 2021, when thanks to the tweets of Elon Musk it jumped from $0.005 to $0.1, with an incredible +2,000% in a month.
Questo boom proseguì anche a febbraio, a marzo e ad aprile dello stesso anno, fino a raggiungere il picco massimo l’8 maggio 2021 quando Elon Musk partecipò al Saturday Night Live nelle vesti di Dogefather.
Evidently, those who had purchased Dogecoin from April to June had paid more for it than it was worth in July of the same year.
In particular Suski had accused Coinbase of having induced him to purchase DOGE on June 3, 2021, when the company sent an email to its users titled “Trade Doge, Win Doge” on the occasion of the listing of Dogecoin on Coinbase.
At that moment the price of DOGE was higher than $0.32, which is double the $0.16 reached the following month.
The problema alla base
Evidently an email with the subject “Trade Doge, Win Doge” advised its users to trade DOGE to win prizes in DOGE.
Sebbene questo non significasse necessariamente che i DOGE comprati andassero holdati, sembrava però significare che andassero comunque comprati.
Instead Suski claims that the advertising campaign was aimed at everyone, even those who had not bought DOGE, because all Coinbase users could participate for free by sending a simple form with the required information, without even being forced to actually trade Dogecoin.
The misunderstanding was due to the fact that the e-mail sent by Coinbase explicitly invited participation in the contest by trading, but on the page of their website dedicated to the contest rules, it was instead written that one could also participate simply by sending Coinbase the form with the data.
A quel punto Suski ha denunciato Coinbase per pubblicità ingannevole, con l’obiettivo di indurre gli utenti ad acquistare almeno 100$ di DOGE.
The real problem for Coinbase is that Suski has launched a true class action that has also gathered many other defendants, who collectively are seeking compensation of over 5 million dollars.
The arbitration not granted
La società aveva chiesto che la causa non andasse in tribunale, ma che potesse essere risolta con un arbitrato diretto tra la società stessa ed i denuncianti.
However, Judge Neil Gorsuch pointed out that arbitration requires both parties to agree to entrust the resolution of the issue to an arbitrator, and even if Coinbase prefers arbitration to resolve financial disputes, as also written in the platform’s terms of use, the plaintiffs in this case prefer to go to court.
And so the Supreme Court of the United States has ruled that a case like this cannot be resolved through arbitration, even if the platform’s terms of use would provide for it. The alternative, therefore, is to entrust the solution of the problem to the district courts, as requested by the complainants.
It is worth noting that this Supreme Court ruling also denied Coinbase’s hypothesis that going to court in cases like this could create chaos and facilitate challenges to platform usage clauses, explicitly stating that it believes this ruling will not be followed by chaos.
The issue was nevertheless decidedly complex, because in reality the US courts are not authorized to intervene in legal disputes when the usage contracts contain only a compromissory clause.
But in the case where users agree on two contracts, one that provides for arbitration and another that provides for disputes of arbitrability to be entrusted to the courts, it is a court that must decide which of the two contracts prevails.
