Coinbase Decision Highlights Importance Of Official Rules' Dispute Provisions

In a rare example of a sweepstakes leading to litigation, Coinbase and its promotion agency, Marden-Kane, were sued over a sweepstakes run by Coinbase and administered by Marden-Kane titled “Trade Doge. Win Doge.” As part of that sweepstakes, Coinbase offered prizes totaling $1.2 million of Dogecoin to individuals who purchased or sold $100 worth of the DOGE cryptocurrency on the Coinbase exchange. Of course, in order to comply with federal and state lottery laws, the sweepstakes rules also included an alternate method of entry (AMOE), which allowed consumers to enter for free without making a purchase. Specifically, under federal and state laws, a promotion that contains all three elements of prize, chance and consideration is considered a lottery and is generally unlawful outside specific contexts, such as licensed casinos and state lotteries. Since sweepstakes by definition include the elements of chance and prize, the element of consideration must be eliminated in