A class action lawsuit was filed against Coinbase on Thursday alleging that the trading platform was negligent in its listing of the TerraUSD stablecoin and alleging that it failed to disclose its financial relationship with Terraform Labs. This is the second class action lawsuit pending against Coinbase. A lawsuit was filed last month regarding GYEN’s disassociation in November.
Thursday’s lawsuit alleges that Coinbase was negligent for failing to perform Terraform Labs’ due diligence before listing TerraUSD and misrepresenting TerraUSD’s risk as an algorithmic stablecoin. The lawsuit compares information about stablecoins provided by trading platforms Robinhood, Gemini, and Kraken to that of Coinbase and concluded that “instead of disclosing the nature of TerraUSD as unsecured, algorithm controlled, and highly risky, Coinbase did so.” pass as just another stablecoin.”
The lawsuit also claims that Coinbase Ventures, the company’s investment arm, was one of the largest backers of Terraform Labs, and that was additional motivation for the company not to disclose TerraUSD’s volatility.
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The plaintiffs and classes in the case are represented by the law firms of Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne. The latter firm is also representing plaintiffs in a case filed against Coinbase and GMO-Z.com Trust on May 13 related to the decoupling of the Japanese yen-pegged stablecoin GYEN in November.
GYEN’s value soared and then fell precipitously a week after it was listed on Coinbase, causing the platform to freeze some users’ accounts. Some users also lost money, “untold millions,” according to the lawsuit, during the incident. The lawsuit claims that GMO-Z.com failed in its duties to the plaintiffs and the class in several ways, beginning with the design of the stablecoin.
Coinbase is alleged to have engaged in negligent misrepresentation and failed to use reasonable care in listing the GYEN despite a reasonably foreseeable risk of disassociation.
This post Coinbase Facing Class Action Lawsuits Over Unstable Stablecoins GYEN and TerraUSD
was published first on https://cointelegraph.com/news/coinbase-is-facing-class-action-suits-over-unstable-stablecoins-gyen-terrausd