A new lawsuit in San Francisco federal court alleges that Coinbase knowingly misled him and other customers into paying to enter Dogecoin-related sweepstakes to win the meme cryptocurrency that they could have simply entered for free.
The $5 Million Lawsuit
The new class-action suit was lodged by David Suski, who claims that he forked out $100 to become eligible for entry to Coinbase’s “Trade Doge, Win Doge” contest. The contest in question took place on June 3 just days after Coinbase Pro added Dogecoin to its platform as a way to incentivize its trading.
The contest promised a grand prize of $1.2 million in Dogecoin and several other smaller prizes. However, Suski posited that he wouldn’t have made this payment if Coinbase had explicitly revealed that there was an alternative way to enter the promotion. At the time, the guidelines of the sweepstakes noted that a user can be eligible for the contest by simply mailing a 3×5-inch index card with their name, address, phone, date of birth, and email address.
The case alleges Coinbase made investors trade $100 or more in Dogecoin in the period between June 3 and June 10 to be eligible for the contest. The plaintiff’s attorneys insist that the company hired by Coinbase to market the sweepstakes made use of “false and misleading” strategies to conceal the free of charge entry option.
For instance, the suit points to the design of the advert used to promote the sweepstakes that mention the rules under a separate “rules and details” section that is written in small, barely visible text.
Suski further accuses Coinbase of deliberately misleading investors in order to boost liquidity on its platform. He adds that the crypto exchange knew exactly what it was doing, specifically because it recently conducted similar $2 million bitcoin sweepstake offers. These bitcoin contests, however, differed from the Dogecoin one in that participants were only asked to sign up for a Coinbase account or mail index cards without the $100 entry fee.
The complaint also indicates that Suski already owned over 1,000 DOGE coins that he bought on stock and crypto trading app Robinhood, and he wouldn’t have paid Coinbase $100 for more tokens had the free entry option been disclosed upfront. The suit reads in part:
“The only reason that Plaintiff undertook to buy more Dogecoins from Coinbase was because the Company led him to believe that doing so was necessary to enter Coinbase’s $1.2 million Sweepstakes.”
At its core, the lawsuit alleges the ads for the sweepstakes were designed to “deceive and confuse” Suski into trading $100 worth of DOGE so as to qualify for entry. It added that Coinbase violated California’s unfair competition laws and false advertising. It thus seeks punitive damages of over $5 million on behalf of Suski and millions of other users who suffered a similar fate.
Coinbase has not publicly commented on the lawsuit at the time of publication.