One of the clients of the cryptocurrency exchange Coinbase is filing a class action claim against it for damages totaling $ 5 million. He believes that the exchange deliberately misled him and other users. By running an advertising campaign that associated with the DOGE coin.
Plaintiff David Suski, a trader on the exchange, believes he was tricked into selling $ 100 worth of Dogecoin to qualify for the 1.2 million Sweepstakes offer.
The documentation says that participation in the lottery is free. However, representatives of the exchange specifically hide this provision in order to receive financial benefits from customers.
Is Coinbase misleading customers?
According to the lawsuit, the marketing firm hired by Coinbase used “inaccurate and misleading” practices. To hide the possibility of free participation. The lawsuit alleges that the full rules for the draw in “small faded print”. According to David Suski, he would not have invested this amount. If Coinbase had made available a free opportunity to participate in the competition.
Sweepstakes known to be a contest where prizes handed out using a special lottery system. The lottery itself held on June 3rd and featured prizes totaling $ 1.2 million in the form of Dogecoin.
By law, when conducting such sweepstakes, companies must provide an opportunity for free participation. Which in this scenario realized by sending a card with the user’s name, address and date of birth by mail. In many cases, however, organizers prefer to attract participants in other costly ways.
Suski argues that Coinbase improperly concealed the possibility of free participation in a bid to increase liquidity on the exchange. According to him, the company could not fail to realize the fact of the violation, since it had previously raffled off $ 2 million in Bitcoin in a similar way. The Bitcoin draw, however, required only registering an account on Coinbase to participate. Whereas in the Dogecoin story, users motivated to invest $ 100 to “make a deal” with the newly added cryptocurrency.
When David Suski learned that it was actually possible to participate for free, he decided to sue the exchange by filing a class action lawsuit.
Will the process be successful?
The lawyer he hired believes that Coinbase deliberately deceived his client in order to obtain benefits by violating its own rules. Whether the process will be successful for the client will become clear after the first court hearings.
Most often, the parties come to an agreement by paying a certain amount of compensation. But would the exchange want to pay $ 5 million? At the same time, reputational losses can also be palpable. Coinbase is unlikely to want to have a reputation for deliberately defrauding its traders.
Therefore, it is possible that the plaintiff will get his way and be paid millions of dollars. One should not expect an early completion of the process, such litigations can last several months.
Such a case is a vivid confirmation of the fact that traders of any exchange need to carefully study all documents related to both activities on the sites and promotions in order not to be deceived.