Coinbase Settles $2.25M Class Action Sweepstake Lawsuit

Coinbase has reached a $2.25 million settlement in the Suski v. Coinbase class action lawsuit following allegations related to misleading sweepstakes for its Dogecoin promotions. This case illuminates the legal complexities and regulatory requirements surrounding sweepstakes operations, emphasising the importance of compliance for businesses.

Coinbase and its sweepstakes administration have announced a class action lawsuit settlement in the case of Suski v. Coinbase, Inc. After lengthy litigation spanning almost four years, the court settlement amounts to $2.25 million. This case highlights essential compliance for sweepstakes operators with federal and state regulations. Failure to meet these stipulations can lead to costly legal battles, just as Coinbase experienced.

The lawsuit began back in June 2021 when Coinbase introduced the Dogecoin cryptocurrency to its platform. To boost trading activity, they engaged a third party to run a sweepstakes offering a substantial grand prize of $300,000. The core of the allegations centred on Coinbase’s website prompts, which suggested users needed to trade $100 worth of Dogecoin to participate in the promotion. Plaintiffs, relying on this information, engaged in trades thinking they were entering validly.

However, after entering the sweepstakes, the plaintiffs discovered there was a free way to participate through a method termed an “Alternative Method of Entry” (AMOE) accessible via U.S. Mail. This crucial information was buried in a separate section of the website. The plaintiffs argued that had this been disclosed upfront, they would not have spent money to engage in the cryptocurrency sweepstakes.

The Suski case serves as a cautionary tale about the complications and high costs associated with lengthy legal disputes over sweepstakes promotions. Before even addressing the core issues of the lawsuit, Coinbase attempted to compel arbitration—but was turned down. This rejection led to a protracted legal battle over three years before determining its legitimacy.

For businesses that are exploring crypto sweepstakes promotions, the Suski case underscores the necessity of following best practices to mitigate risks of legal actions. For example, when outlining contest rules and associated terms, it’s imperative that they clearly state that no purchase is necessary to win. Additionally, firms should disclose that making a purchase does not enhance one’s winning odds and affirm that those utilizing the AMOE have equal chances as paying entrants.

Sweepstakes regulations can vary significantly between states, complicating compliance. Therefore, it’s wise for sweepstakes operators to engage experienced attorneys who specialise in this area to help navigate the laws before launching any promotions.