Coinbase Faces Lawsuit After Customers Lose Millions On Stablecoin
2022.05.15 15:02
Coinbase Faces Lawsuit After Customers Lose Millions On Stablecoin
- Coinbase (NASDAQ:COIN) is staring a lawsuit in the eye after trading and promoting the gyen stablecoin.
- They are alleging the stablecoin’s issuer, GMO-Z Trust and Coinbase described the gyen as pegged 1:1 in value to the Japanese yen.
- Coinbase decided to freeze customer accounts and disabled trading in the stablecoin.
Coinbase is staring a lawsuit in the eye after customest alleged that they suffered losses amounting to millions of dollars over the crypto exchange’s role in trading and promoting the gyen stablecoin.
The potential class-action lawsuit was filed on Tuesday by Kenneth Donovan and Hussies Kassfy. They are accusing the largest US crypto exchange of misleading customers about the stability of the gyen.
They are alleging the stablecoin’s issuer, GMO-Z Trust and Coinbase described the gyen as pegged 1:1 in value to the Japanese yen, even though they were aware of the fact that the peg was prone to break. The people who are involved in the lawsuit claim that this information was withheld from investors.
Very soon after Coinbase started trading the ethereum-based gyen, it lost its peg.The price jumped up to several times the value of the Japanese currency before taking a huge plummet.
After this, Coinbase decided to freeze customer accounts and disabled trading in the stablecoin. The exchange cited technical issues and unusual market conditions as the reason for the decision.
The complaint stated that “investors placed orders believing the coin’s value was, as advertised, equal to the yen, but the tokens they were purchasing were worth up to seven times more than the yen.”
The complainant added to this when he said that “just as suddenly, the gyen’s value plunged back to the pag, falling 80% in one day.”
To make things even worse, “as the gyen’s va;lue was cratering back to the yen, Coinbase compounded the harm by restricting many customer’s ability to sell the asset, then abruptly suspended all trading of the asset without explanation.”
GMO-Z Trust is named as a defendant alongside Coinbase Global and Coinbase Inc. in the lawsuit, which was filed in district court for Northern California.
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