The Promo That Started The Legal Storm
Back in June 2021, Coinbase was riding high on the meme coin momentum. Dogecoin had just been listed on the exchange, and to hype the event, they launched a sweepstakes offering a $300,000 grand prize, which was part of a $1.2 million prize pool. Users were told to trade $100 worth of DOGE to enter.
What many users didn’t realize was that they could’ve entered for free by mailing in a form. This was a detail that Coinbase didn’t exactly hide, but definitely buried. According to the complaint, the free entry option was tucked into faint, hard-to-spot text, far from the bold “TRADE DOGE NOW” buttons that were splashed across the promotion.
That’s where David Susk, the lead plaintiff, comes in. He already held Dogecoin on Robinhood and said he wouldn’t have made a purchase on Coinbase if he’d known there was a no-cost way to join the sweepstakes. Instead, he went ahead with the trade, and ended up setting off what would become a class-action lawsuit, alleging the promo was misleading and effectively turned into a pay-to-play lottery.
Coinbase’s Supreme Court Detour
What could’ve been a routine class-action lawsuit turned into a years-long legal standoff that reached the U.S. Supreme Court. Coinbase, aiming to keep the case out of public court, argued that all users had agreed to arbitration when they signed up for the platform. But the courts saw things differently.
The sweepstakes came with its own set of official rules, which listed California courts, not arbitration, as the venue for resolving disputes. That distinction turned out to be crucial as The Ninth Circuit noted:
“The official rules evince the parties’ intent not to be governed by the user agreement’s arbitration clause when addressing controversies concerning the sweepstakes.”
In 2023, the Supreme Court declined to override that decision, allowing the case to move forward in federal court. Coinbase’s attempt to enforce arbitration was rejected, marking a rare but important instance where a company’s default terms were set aside in favor of more specific contest language.
Suski’s attorney, David J. Harris Jr., summed it up in a statement to Law360:
“We are hopeful that the court, like every judge below, will hold Coinbase to the plain language of its own contracts with consumers.”
The outcome confirmed a key principle: sweepstakes promotions come with legal strings attached, and the rules you write may be the rules you’re held to.
That meant the case would be decided in public court, not behind closed doors.
What’s in the Settlement?
As of last week, Coinbase and its co-defendant, marketing firm Marden-Kane, agreed to a $2.25 million settlement. Here’s how that breaks down:
- It covers all U.S. users who opted into the sweepstakes and traded $100 worth of DOGE during the promotion window in June 2021.
- Each user will be reimbursed for transaction fees and “spreads” on their first $100 trade, which is what Coinbase profited from most.
- The parties estimate Coinbase made about $1.3 million from these trades alone.
- No wrongdoing was admitted by either Coinbase or Marden-Kane, though both agreed to settle.
Coinbase told Decrypt in a statement:
“We are pleased to have reached an agreement to resolve the case, subject to the Court’s approval.”
Marden-Kane, a New York–based marketing firm that helped administer the sweepstakes, has however not publicly commented.
The Industry Wake-Up Call
This case isn’t just about Coinbase, it’s a wake-up call for every crypto platform that’s dabbling in promotions, sweepstakes, or gamified contests.
Here’s what this lawsuit made painfully clear:
- The “no purchase necessary” clause must be clear, visible, and accessible
- Arbitrary enforcement of user agreements won’t override specific contest terms
- Crypto sweepstakes must be held to the same consumer protection laws as traditional contests
Promotions tied to trading or spending behavior are walking on very thin ice, and now we have a $2.25 million reminder of what happens when that balance tips the wrong way.
Final Word: Always Read the Fine Print
Coinbase’s Dogecoin sweepstakes was supposed to be a celebration. Instead, it became a case study in how not to structure a crypto giveaway. With meme coins, influencer buzz, and the line between “contest” and “gambling” blurrier than ever, clear, legal disclosures aren’t just nice, they’re non-negotiable.
For players? This is a reminder that every promo has rules, and not all of them are printed in bold. For platforms? Consider this a free legal lesson that no sweepstakes prize is worth the class action headache.
Blaise Luis
