The major cryptocurrency exchange Coinbase is being sued by a client in a class action lawsuit worth $5 million regarding the exchange’s recent Dogecoin sweepstake. The client claims to have been “deceived” into purchasing Doge on Coinbase’s platform by an advertising campaign aimed to encourage the trading of the digital currency.
Coinbase was founded nearly a decade ago as a simple means to buying cryptocurrency. The company went public through a direct listing on the Nasdaq stock exchange in April this year and had become the first major crypto company to do so. Since then, other major crypto firms have chosen the same route.
Now, the largest crypto exchange in the U.S. is being sued by a disgruntled Dogecoin trader. The plaintiff, David Suski, says he was tricked into trading $100 worth of Dogecoin on the exchange’s trading platform after receiving an email from Coinbase regarding a $1.2 million sweepstakes offer.
A sweepstake is a type of contest where prizes or money is offered to a randomly selected person or group. Coinbase runs sweepstakes where prizes are awarded through a type of lottery system to clients making use of certain product services on the exchange’s platform.
An email stating “Trade Doge, Win Doge.” was sent out to Coinbase users on June 3, 2021, informing them of the sweepstakes with prizes worth $1.2 million in Dogecoin. This was also the first day that Dogecoin was available for trade on the Coinbase exchange.
As you can see, the email instructs users to opt in and trade $100 worth of Doge on the exchange by the 10th of June, 2021 for a chance to win a prize. However, the sweepstake rules state that it is also possible for users to enter by simply sending Coinbase a 3×5 inch index card with their name, address, email address, phone, and date of birth written on it.
The plaintiff claims that the advertisement was misleading as anyone could enter the sweepstakes free of charge. His lawyer believes that this rule should have been disclosed upfront, but instead, it was only mentioned in the “rules and details” section.
The legal document for the lawsuit against Coinbase argued that the advertising campaign for the Dogecoin sweepstakes was deliberately designed to “deceive and confuse” users into purchasing and trading $100 worth of Doge on the exchange to enter.
“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.” said the legal document.
The document also claims that the plaintiff, David Suski, would not have purchased the $100 worth of Doge if the sweepstake’s advertisement had made the 100% free entry option to enter the contest clear.
It also stated that a “deceptive digital ad campaign” has cost traders millions of dollars in Dogecoin purchases and unnecessary commission fees. The plaintiff is claiming punitive damages exceeding the value of $5,000,000 in a class action suit on behalf of himself and millions of other Coinbase users.