base of coins clients have sued the exchange for promoting and trading GYEN, a stablecoin that crashed. A report broke this news earlier today, noting that the lawsuit is targeting both Coinbase and the issuer of the GYEN stablecoin, which turned out to be anything but stable.
According to the report, Coinbase customers yesterday filed a class action lawsuit in federal court in Northern California. The lawsuit alleges that Coinbase and GMO-Z.com, the issuer of Tokyo-based GYEN, misled investors about the stability of the token. As a result, investors suffered losses worth millions of dollars.
The complaint noted that GMO-Z.com issued GYEN pegged 1:1 to the Japanese yen. However, the value of GYEN fell below the Japanese yen in November last year after it was listed and traded by Coinbase.
The complaint further stated that
“Investors placed orders believing that the value of the coin was, as advertised, equal to the yen, but the tokens they were buying were worth up to seven times the yen. Suddenly, the value of GYEN plummeted back to parity, dropping 80 percent in one day.”
Coinbase prevented customers from trading GYEN after the crash
Following the 80% drop, Coinbase stopped trading GYEN. The complaint alleges that the exchange exacerbated the damage already caused by denying customers the opportunity to sell the asset. As a result, GYEN holders on Coinbase lost millions in just a few hours.
The investors who filed the lawsuit applied to represent all of GYEN’s investors. However, they did not specify the amount of compensation they seek.
At the time of writing, GYEN is trading at $0.007732. This amount is equivalent to the level at which the Japanese yen is trading against the US dollar.
This news comes after Coinbase recently released its First Quarter 2022 Earnings Report. The report detailed that the net income of the exchange plummeted 53% to reach 1.165 million dollars. Coinbase also posted a net loss of $430 million.
Additionally, Sophia Zaller, a crypto underwriter at Relm Insurance, discovered a bankruptcy filing statement in the report The statement noted that Coinbase could treat customers as general unsecured creditors in the event of bankruptcy. Zaller added that this is a red flag.
New release today. $ CURRENCY (Coinbase) 10-Q: 👀
“In bankruptcy… customers could be treated like our general unsecured creditors.” 🚩🚩🚩
🚨Get your #bitcoin out of exchanges.🚨 pic.twitter.com/KDBiAvYcog
— Sofia Zaller (@sophiamzaller) May 10, 2022
As a result, investors began to withdraw their funds from the exchange, which resulted in a sharp drop in the price of COIN.
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This post Customers Sue Coinbase for Promoting and Trading GYEN Token
was published first on https://cryptoslate.com/customers-sue-coinbase-for-promoting-and-trading-the-gyen-token/