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Crypto Law/Level V · Builders and launchers/5.3 Promotion and liability/Lesson 6

Terms of service and disclaimers

What website terms, arbitration clauses and risk disclaimers can do for a crypto project, when courts refuse to enforce them, and what no disclaimer can waive.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Use clickwrap: a clear ‘I agree’ box with the terms linked beside it, and log which version each user accepted. That is free and meets the Berman (9th Cir. 2022) test, which bare browsewrap fails.
  2. Keep one set of terms with a single, consistent forum clause across every document. In Suski (2024), conflicting contracts meant a court, not an arbitrator, decided which one governed, which added cost and uncertainty to the dispute.
  3. Write risk warnings specific to the product. They help with consumer law, but the forward-looking safe harbour (15 U.S.C. 77z-2) covers only SEC-reporting issuers, so most projects cannot use it.
  4. Do not rely on ‘not a security’ or claim-waiver clauses. Section 14 of the Securities Act and section 29(a) of the Exchange Act void them, and a ‘not financial advice’ label does not satisfy disclosure duties.
  5. For UK consumers, unfair terms do not bind them (Consumer Rights Act 2015 s62), so draft balanced terms rather than ones that will be struck down.

MaterialsThe terms of service of a crypto app or exchange you use, including the version date and how you accepted itBerman v. Freedom Financial Network, 30 F.4th 849 (9th Cir. 2022), on online contract formationCoinbase, Inc. v. Suski (U.S. Supreme Court, 23 May 2024)Section 14 of the Securities Act (15 U.S.C. 77n) and section 29(a) of the Exchange Act (15 U.S.C. 78cc)

Wonder

  1. Is a user bound by terms they never opened or read?
  2. Can a ‘not financial advice’ or ‘this is not a security’ disclaimer protect a project?
  3. What happens when two sets of terms from the same company say different things?

Explore

  1. Terms of service are the contract between a platform or app and its users. Crypto terms commonly include an arbitration clause (disputes go to a private arbitrator, not a court), a class-action waiver, a choice of forum and law, a cap on liability, and risk warnings. In the Celsius bankruptcy the terms of use decided who owned deposited coins (lesson 4.1.4). But terms bind only if a contract was actually formed, and US courts test that carefully when the contract is formed online.
  2. In Berman v. Freedom Financial Network, decided on 5 April 2022, the Ninth Circuit held that web terms bind a consumer only if the site gives ‘reasonably conspicuous notice’ of them and the consumer takes an action, such as clicking a button or ticking a box, that ‘unambiguously manifests’ assent. Terms in tiny grey text, accepted by a button labelled only ‘Continue’, failed both tests. In Sarcuni v. bZx DAO in March 2023 a federal court refused to enforce terms linked in small font that users saw only after scrolling (lesson 5.3.4).
  3. Arbitration clauses have reached the Supreme Court in crypto cases. In Coinbase, Inc. v. Bielski, decided 6-3 on 23 June 2023, the Court held that when a trial court refuses to send a case to arbitration and that refusal is appealed, the trial court must pause the case until the appeal is decided. In Coinbase, Inc. v. Suski, decided unanimously on 23 May 2024, users had accepted a user agreement with an arbitration clause and later sweepstakes rules sending disputes to California courts. The Court held that a court, not an arbitrator, decides which contract governs.
  4. Some protections cannot be signed away. Section 14 of the Securities Act makes void any provision binding a buyer of a security ‘to waive compliance’ with the Act, and section 29(a) of the Exchange Act does the same for that Act. So a clause saying ‘this token is not a security’ or ‘buyers waive all claims’ does not change how the token is classified (lesson 3.1.1) or remove claims under section 12 (lesson 5.3.2). A ‘not financial advice’ label does not satisfy the duty to disclose paid promotion either (lesson 5.3.1).
  5. Cautionary language helps only in limited ways. The statutory safe harbour for forward-looking statements, which protects predictions accompanied by ‘meaningful cautionary statements’, applies only to issuers already subject to SEC reporting requirements (15 U.S.C. 77z-2), so most token projects cannot use it. Outside the US, consumer law can strike terms down. In the UK, section 62 of the Consumer Rights Act 2015 says an unfair term in a consumer contract is not binding on the consumer, and a term is unfair if, contrary to good faith, it creates a significant imbalance against the consumer.
  6. For builders, the lessons are mechanical: one consistent set of terms rather than several that conflict, a clear ‘I agree’ step with the terms linked beside it, a record of which version each user accepted, and risk warnings that describe the actual risks of the product rather than generic boilerplate. For users, terms decide where and how a dispute can be brought. A practical check: find the terms you accepted on one crypto service, note the version date, whether there is an arbitration clause or class waiver, and whether it offers a time-limited opt-out.

Key facts

  • In Berman v. Freedom Financial Network (9th Cir. 2022) online terms required reasonably conspicuous notice and an unambiguous act of assent.
  • In Coinbase, Inc. v. Bielski (2023) the Supreme Court held that a trial court must stay proceedings during an appeal on arbitrability.
  • In Coinbase, Inc. v. Suski (2024) the Supreme Court held that a court decides which of two conflicting contracts governs arbitrability.
  • Section 14 of the Securities Act voids any provision binding a buyer of a security to waive compliance with the Act.
  • The statutory safe harbour for forward-looking statements in 15 U.S.C. 77z-2 applies only to issuers subject to SEC reporting requirements.
  • Under section 62 of the UK Consumer Rights Act 2015, an unfair term in a consumer contract is not binding on the consumer.

Exercise nine, six, three, one

9CollectList up to 9 clauses or disclaimers from crypto terms of service or websites you have used, such as arbitration, class waivers, liability caps or ‘not financial advice’ notices (some lists are shorter).
6ClusterSort them into 6 groups: dispute forum, class waivers, liability limits, risk warnings, classification claims such as ‘not a security’, and advice disclaimers.
3DistillReduce the 6 groups to 3: clauses likely enforceable if properly accepted, clauses that statutes such as section 14 may void, and clauses whose effect depends on how they were accepted.
1CrystallizeWrite 1 sentence explaining why a disclaimer cannot turn a security into a non-security.

Fact check

Dates, figures and claims checked against the published sources listed below.

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