Thu, March 28

Coinbase Faces Class Action Suits Over Recent Stablecoin Crash

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  • The lawsuit claims that Coinbase failed to disclose TerraUSD’s true nature.
  • GYEN surged in value, then plummeted a week after Coinbase added it to its platform.

On Thursday, a class-action lawsuit was launched against Coinbase, claiming the trading platform was irresponsible in listing the TerraUSD stablecoin and charging that it neglected to disclose its financial connection with Terraform Labs. The second class-action lawsuit against Coinbase is now pending. In the wake of GYEN’s depegging in November, a lawsuit was launched last month.

Thursday’s lawsuit claims that Coinbase was negligent in neglecting to undertake due diligence on Terraform Labs before listing TerraUSD and misrepresenting TerraUSD’s risk as an algorithmic stablecoin. The lawsuit claims that Coinbase failed to disclose TerraUSD’s true nature as an uncollateralized, algorithm-controlled, and extremely dangerous stablecoin when comparing the information supplied by trading platforms Robinhood, Gemini, and Kraken on stablecoins.

Struggle Continues Over Stablecoin Crash Effects

Coinbase Ventures, the business’s investment arm, was one of the main supporters of Terraform Labs, and the complaint argues there was an extra incentive for the company not to disclose TerraUSD’s volatility.

Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne represent the plaintiffs and classes in action. The plaintiffs launched a lawsuit against Coinbase and GMO-Z.com Trust on May 13 due to the depegging of the Japanese yen-pegged GYEN stablecoin in November. The latter business represents the plaintiffs.

GYEN surged in value, then plummeted a week after Coinbase added it to its platform, leading some users to lose access to their wallets. The complaint claims that “untold millions” of dollars were lost by users due to the event. The action says that GMO-Z.com failed in several ways, starting with the design of the stablecoin for the plaintiffs and the class.

Coinbase has been accused of negligent misrepresentation and failing to exercise reasonable care in listing the GYEN despite a reasonably foreseeable risk of depegging. 

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