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The Schenk Law Firm filed a lawsuit last week filed a lawsuit on behalf of a minor in the New York Supreme Court. Allegations claim the child was recruited into illegal offshore crypto gambling through online platforms and influencer-driven marketing that include Stake.com, one of the largest gambling sites in the world.
In addition to Stake.com, Coinbase is also named as a defendant. Coinbase recently entered the prediction market space. It is among the largest cryptocurrency exchanges.
The complaint alleges offshore crypto gambling platforms are fueling what may be the next major youth addiction crisis using influencer marketing on platforms such as Twitch and Kick to reach millions of young users. Among the most prominent examples cited is global celebrity Drake, who is reportedly paid as much as $100 million per year to livestream gambling activity to a vast audience that includes minors.
"Stake.com operates illegally in every state in the United States. And yet over five million Americans visit the platform every month. The founders pay influencers hundreds of millions of dollars a year to target minors and livestream gambling on their respective media and gambling platforms," said Benjamin Schenk, a trial lawyer with The Schenk Law Firm, based in San Diego. "These entities operate without a moral anchor, run by people who see themselves as above borders, ethics and the law. It's time they answer to the American public."
According to the complaint, the plaintiff, who was 13 years old at the time, was able to open a Coinbase account and fund offshore gambling activity. Coinbase allegedly processed repeated cryptocurrency purchases and transfers to offshore gambling wallets despite multiple red flags, including its own 18+ age requirement, an identity mismatch on the account and a linked payment method labeled "High School Checking" within Coinbase's internal system.
The complaint further details an alleged sophisticated, three-pronged evasion strategy employed by Stake to circumvent U.S. restrictions, including the use of VPNs, mirror sites and a covert network operating through Discord that distributed pre-verified accounts to users, effectively bypassing age and identity verification safeguards.
The child was diagnosed with compulsive gambling disorder and panic disorder and now attends Gamblers Anonymous meetings four times per week while living under his father's financial guardianship.
"This is not a story about a kid who found a loophole. It's a story about an industry that built the loophole, marketed it to children and collected fees on every transaction," said Frederick Schenk, managing partner of The Schenk Law Firm. "We intend to hold every link in that chain accountable."
- Jagajeet Chiba, Gambling911.com
