Earlier this week, Coinbase and its sweepstakes administrator agreed to the terms of a class action
settlement within the matter of Suski v. Coinbase, Inc.
After almost 4 years of litigation, together with a visit to the United States Supreme Court, Plaintiffs
accepted $2.25 million {dollars} to settle their crypto sweepstakes
lawsuit.
It is crucial for sweepstakes operators to make sure that their
promotions adjust to relevant state and federal laws. As
evidenced by Suski, deceptive sweepstakes promotions can
end result within the expenditure of an excessive amount of money and time in
responding to class motion lawsuits and/or regulatory motion.
The “Dogecoin” Crypto Sweepstakes Lawsuit
In June 2021, Coinbase made the “Dogecoin”
cryptocurrency obtainable on its platform. To extend buying and selling
quantity, it employed a 3rd occasion to manage a crypto sweepstakes
with a prime prize of $300,000. As alleged, numerous prompts on
Coinbase’s web site knowledgeable customers that, to be able to
take part, that they had to purchase or promote $100 price of
“Dogecoin” on the Coinbase platform. Plaintiffs entered
the sweepstakes promotion and traded the cryptocurrency, as
instructed, for a shot on the prime prize.
Solely after coming into the promotion, Plaintiffs claimed, did they
study that there was an alternate, free technique of entry
(“AMOE”) obtainable to enter the sweepstakes. A separate
“guidelines and particulars” web page of Coinbase’s web site made
clear that buyers may additionally enter the sweepstakes by U.S. Mail
with out buying and selling cryptocurrency. Plaintiffs subsequently filed a
class motion lawsuit within the Northern District of California,
asserting that, had Coinbase correctly disclosed this AMOE, they
wouldn’t have paid cash to enter the cryptocurrency
sweepstakes.
Ideas for Operating a Crypto Sweepstakes
The Suski proceedings show simply how time
consuming and expensive extended sweepstakes-associated litigation can
be. Earlier than the deserves of the lawsuit may even be decided,
Coinbase filed a Movement to Compel Arbitration. The Movement was
denied; and three years of authorized proceedings adopted to find out
whether or not the court docket’s denial was correct.
Companies which might be serious about working crypto sweepstakes
promotions ought to make use of greatest practices to cut back the likelihood
of discovering themselves defending an motion in a court docket of regulation. Amongst
different measures, sweepstakes operators should train warning when
drafting sweepstakes contest guidelines, in addition to related
disclosure and disclaimer language. For instance, sweepstakes
contest guidelines and related phrases ought to all the time:
- Clarify that no buy/fee is important to enter or
win.
- Embody disclosures that clarify that a purchase order/fee
is not going to enhance the chances of successful.
- Clarify that entrants who make the most of the sweepstakes AMOE have
the identical odds of successful as those that enter by making a
buy.
Sweepstakes laws are fairly sophisticated and differ from
state to state. As such, it is vital that sweepstakes operators
and their advertising groups safe the providers of skilled
sweepstakes attorneys previous to promotion launch.
Comparable Weblog Posts:
California Court Sides with Coinbase in
Sweepstakes AMOE Action
Coinbase Sued For Misleading Sweepstakes
Advertising
Reminder: Quebec Sweepstakes Guidelines Exempt
U.S.-Based Contests!
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about your particular circumstances.
