A recent ruling by a U.S. appeals court said that Coinbase Global Inc COIN cannot force former customers to use private arbitration to settle disputes related to a Dogecoin sweepstakes.
Former Coinbase users filed the lawsuit against the firm, alleging that they were tricked into paying $100 or more to enter a contest in June 2021 to win prizes worth up to $1.2 million in Dogecoin DOGE/USD, reports Reuters.
To create an account with Coinbase, the users signed off on the exchange’s user agreement, which included a provision requiring them to pursue any disputes in arbitration.
Business organizations say that arbitration is more efficient than legal action, although plaintiffs’ attorneys say that arbitration benefits businesses.
However, a federal judge declined to order arbitration, and the 9th U.S. Circuit Court of Appeals in San Francisco upheld that decision. Instead, it cited a clause in the sweepstakes’ official rules mandating that disputes be resolved in California courts.
According to the report, Coinbase has appealed the case to the U.S. Supreme Court after the 9th Circuit refused to suspend trial court proceedings while the company challenged the judges’ orders not to push the lawsuit into arbitration. Last week, the U.S. Supreme Court agreed to review the case, along with another involving the exchange.
Meanwhile, a judge has decided to halt the proceedings in the sweepstakes case pending appeal.