Cryptocurrency exchange Coinbase Global Inc. (NASDAQ:COIN) is facing a class-action lawsuit from a Dogecoin (CRYPTO: DOGE) trader who is seeking $5 million in damages from an allegedly misleading Dogecoin campaign.
What Happened: In the legal document, plaintiff David Suski claimed he was deceived into trading $100 of Dogecoin to become eligible for entry into Coinbase’s $1.2 million “Dogecoin Sweepstakes” beginning on June 3.
The complaint alleges that in the Sweepstakes promotions, Coinbase said users had to buy or sell $100 in Dogecoin between June 3 and June 10 to be eligible for a chance to win a prize.
The document claims that Coinbase’s campaign was “misleading” because entry into the Sweepstakes could be made free of charge. However, Coinbase allegedly did not disclose the fact upfront and instead mentioned it only separately under a “rules and details” section.
The lawsuit is seeking more than $5 million in damages on behalf of the plaintiff and millions of other Coinbase users.
Why It Matters: The sweepstakes was part of efforts by Coinbase to incentivize trading in Dogecoin following the meme cryptocurrency’s debut on the cryptocurrency exchange in June.
Edward Moya, the senior market analyst at Oanda, noted in June that Dogecoin’s debut on Coinbase may eventually attract traditional investors and not just the “Robinhood/Reddit army.”
While Shiba Inu-themed cryptocurrency’s year-to-date gain stands at 2,867.3%, it is down almost 77.1% from its all-time high of $0.7376 reached in May.
Price Action: Coinbase Global shares closed almost 2% lower in Monday’s regular trading session at $220.61, but rose 0.4% in the after-hours session to $221.50.
Dogecoin is down 5.3% during the last 24 hours, trading at $0.1688 at press time.