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Monday, September 26, 2022

Coinbase Will Be Facing Class Action Suits

Last Thursday saw a class-action suit was filed against Coinbase that claimed that the trading platform had been pretty negligent in its listing of the stablecoin for TerraUSD. The lawsuit also alleged that it had failed to disclose the financial relationship Terraform Labs. This is the second class-action suit that has been kept outstanding against the platform. One of the suits was filed against the platform the previous month in connection with the depegging of the GYEN in November. 

Coinbase Has Had A Class-Action Suit Filed Against Them

The suit filed against Coinbase on Thursday went on to claim that the platform was negligent for failing to conduct their due diligence of Terraform Labs before it listed TerraUSD and went on to misrepresent the risk TerraUSD posed as an algorithmic stablecoin. The suit also compared the information that was provided on stablecoins by trading platforms Gemini, Robinhood, and Kraken to the one that was provided by Coinbase. After this, the suit concluded that rather than disclosing the nature of TerraUSD as uncollateralized, risky, and controlled by an algorithm, the platform went on to pass it off as simply another stablecoin. 

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The suit further claimed that Coinbase Ventures, which is the investment arm of the company, had turned out to be one of the largest backers of the stablecoin, and this was a definite additional motivation for the company to not disclose the volatility of TerraUSD.

The GYEN did shoot up in its value after which it dropped quite a lot the next week after it was listed on Coinbase, which caused the platform to freeze the accounts of a few users. This definitely led to some of the users losing out on money- which the suit claimed. It also mentioned that GMO-Z.com had failed in its duties to the plaintiffs as well as the class in quite a few ways- which began with the design of the stablecoin. 

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