The cryptocurrency exchange is accused of failing to do its right thing, among other things, when users lose a lot of money due to the loss of stablecoin.
A class-action suit was filed against Coinbase on Thursday, claiming the trading platform has neglected TerraUSD stablecoin’s listing and that it had failed to disclose its financial relationship with Terraform Labs. This is the second class-action suit outstanding against Coinbase. A lawsuit was filed last month over GYEN’s depegging in November.
Thursday’s lawsuit alleges that Coinbase failed to properly manage Terraform Labs before listing TerraUSD and misrepresented TerraUSD’s risk as an algorithmic stablecoin. The lawsuit compares Stablecoin data provided by trading platforms Robinhood, Gemini, and Kraken to that of Coinbase and concluded that “Rather than disclose the nature of TerraUSD as uncollateralized, controlled by an algorithm, and highly risky, Coinbase passed it off as just another stablecoin.”
The suit further claims Coinbase Ventures, the investment arm of the company, was one of the biggest supporters of Terraform Labs, and that was an additional incentive for the company not to disclose TerraUSD’s volatility.
The plaintiffs and classes in the case are represented by law firms Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne. The next firm also represents the plaintiffs in a case filed against Coinbase and GMO-Z.com Trust on May 13 related to the depegging of the Japanese yen-pegged GYEN stablecoin in November.
One week after being listed on Coinbase, the value of GYEN increased, causing the platform to freeze some users’ accounts. Some users also lost money – “untold millions,” according to the suit – during the incident. The suit alleges 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 has been accused of negligence and failed to use reasonable care to list GYEN.
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