In brief
- Coinbase and marketing firm Marden-Kane have agreed to pay a $2,250,000 settlement to disgruntled users who traded Dogecoin.
- The lawsuit centered on an allegedly “false and misleading” sweepstakes with a $300,000 top prize.
- The case was first brought in June 2021, when Dogecoin’s price hovered around $0.39. It now sits at $0.23.
Crypto exchange Coinbase and marketing firm Marden-Kane have agreed to pay a $2,250,000 settlement to resolve all claims in a years-long class action lawsuit brought by a disgruntled customer who partook in an allegedly “false and misleading” Dogecoin sweepstakes, court documents filed last week show.
The settlement, if approved by the U.S. District Court in the Northern District of California, would compensate all of the exchange’s users in the U.S. who opted into the Dogecoin sweepstakes and traded $100 worth of the meme coin during a one-week period in June 2021.
Launched alongside Dogecoin’s Coinbase trading debut, the promotion promised a grand prize of $300,000 among smaller prizes, and was free to enter. However, a link on the exchange’s website detailing that key fact was disguised using small and faint text, alleged Coinbase customer David Suski.
Suski claimed that he would not have purchased Dogecoin on Coinbase if he had known that the exchange’s contest was free to enter, because he already owned the cryptocurrency on retail brokerage Robinhood. His lawsuit sought $5 million in damages.
“We are pleased to have reached an agreement to resolve the case, subject to the Court’s approval,” a Coinbase spokesperson told Decrypt.
In terms of compensation, each member of the lawsuit’s settlement class would receive the amount of money they spent on transaction fees and “spreads” that were charged by Coinbase on their first $100 worth of Dogecoin trades during the sweepstakes’ one-week period.
The lawsuit’s parties determined that Coinbase raked in around $1.3 million on users’ first $100 worth of Dogecoin trades during the sweepstakes’ short run.
The lawsuit also named Marden-Kane as a defendant, a Syosset, New York marketing agency that Coinbase tapped to administer the sweepstakes. Both parties have “long denied any wrongdoing,” arguing “a reasonable customer would have discerned payments were unnecessary for entry upon reading the ‘no purchase necessary’” language in the ad.
Marden-Kane did not immediately respond to a request for comment from Decrypt.
The dispute was weighed by the U.S. Supreme Court last year, and the justices rejected an argument from Coinbase that sought to compel arbitration. The court’s denial affirmed a ruling from the United States Court of Appeals for the Ninth Circuit.
The price of Dogecoin was recently trading hands around $0.23, a 3.2% decrease over the past day, according to crypto data provider CoinGecko. Amid cooling trade tensions between the U.S. and China, the asset’s price surged 34% over the past week.
On June 3, 2021—the day the Dogecoin sweepstakes began—Dogecoin changed hands around $0.39. Less than a month before, the asset’s price peaked around $0.69, alongside tech CEO Elon Musk’s much-anticipated appearance on Saturday Night Live.
Musk’s DOGE antics, which continue to this day, inspired a separate lawsuit against the billionaire, alleging that his misleading statements left investors with significant financial losses. That lawsuit, which sought $258 billion in damages, was dropped in mid-November.
David Harris, a lawyer representing Suski, did not immediately respond to a request for comment from Decrypt.
Edited by Andrew Hayward
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