Coinbase and Marketing Firm to Pay $2.25M to Settle Dogecoin Sweepstakes Class-Action Lawsuit

Crypto exchange Coinbase and marketing firm Marden-Kane have agreed to pay a $2,250,000 settlement to resolve all claims in a 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, which still requires approval from 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—which is still open for entry—promises 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, claimed 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, which was filed in 2021, sought $5 million in damages.

“We are pleased to have reached an agreement to settle 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 parties agreed that Coinbase earned an estimated $1.3 million from those transaction fees and spreads.

The lawsuit also named Marden-Kane—a Syosset, New York marketing agency that Coinbase tapped to manage the sweepstakes—as a defendant. 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.

The dispute was recently considered by the U.S. Supreme Court, which last month rejected an argument from Coinbase that sought to compel arbitration. The justices’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 24 hours, 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 was changing hands around $0.39. Less than a month before, the asset’s price peak 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, also spawned a separate lawsuit against the billionaire, alleging that his misleading statements to investors in May 2021 left them 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.