A U.S. appeals court has ruled that Coinbase Global Inc. (NASDAQ: COIN) cannot compel former clients to resolve claims relating to a Dogecoin sweepstakes through private arbitration.
The former Coinbase users who claim they were duped into paying $100 or more to enter a competition in June 2021 to win prizes worth up to $1.2 million in Dogecoin (CRYPTO:DOGE) have launched a lawsuit against the company, according to Reuters.
The customers agreed to the terms of the exchange’s user agreement, which included a clause requiring them to arbitrate any issues, in order to open an account with Coinbase.
Despite the claims of plaintiffs’ attorneys to the contrary, business organizations feel that arbitration is more effective than litigation.
The 9th U.S. Circuit Court of Appeals in San Francisco affirmed a federal judge’s refusal to mandate arbitration, nevertheless. Instead, it referenced a provision in the official rules of the sweepstakes that required disputes to be addressed in California courts.
After the 9th Circuit refused to halt trial court proceedings while the business contested the judges’ instructions not to force the dispute into arbitration, Coinbase reportedly appealed the matter to the U.S. Supreme Court. The U.S. Supreme Court decided to take a look at the case and another one involving the transaction last week.
The sweepstakes case’s procedures will be suspended awaiting an appeal, a judge has determined in the interim.
 A U.S. appeals court decided on Friday that Coinbase Global Inc. cannot compel former clients to utilize private arbitration rather than the courts to settle disputes about a Dogecoin sweepstakes the cryptocurrency exchange hosted.
Four former Coinbase customers filed a lawsuit against the firm, alleging that it tricked them into paying $100 or more to enter a contest in June 2021 with the possibility of winning prizes worth up to $1.2 million in Dogecoin.
To open an account, each user had to accept the terms of the company’s user agreement, which included a clause mandating users to arbitrate any conflicts.
The decision was made on Friday, a week after the US Supreme Court decided to take up a procedural matter from that case as well as another one that Coinbase had unsuccessfully attempted to drive into arbitration.
However, a federal judge rejected to order arbitration, and the 9th U.S. Circuit Court of Appeals in San Francisco upheld that decision, citing a clause in the official rules of the sweepstakes that mandates that disputes be resolved in California courts.
