On Thursday, June 16, a class action lawsuit was filed against Coinbase, accusing the exchange of negligence in listing stablecoin TerraUSD and failure to disclose its financial relationship with Terraform Labs. This is the second class action lawsuit against Coinbase. A lawsuit was also filed last month in connection with the depegging of GYEN in November.
The lawsuit claims that Coinbase was negligent in performing due diligence prior to listing TerraUSD and misrepresented the risks of TerraUSD as an algorithmic stablecoin. The lawsuit compares information on stablecoins provided by trading platforms Robinhood, Gemini, and Kraken with Coinbase and concludes that: Instead of revealing the nature of TerraUSD as uncollateralized, controlled by an algorithm, and highly risky, Coinbase treated it like another stablecoin.
The lawsuit also says that Coinbase Ventures, the investment arm of the company, is one of Terraform Labs’ biggest backers, and that’s one of the reasons why the company hasn’t disclosed TerraUSD’s volatility.
Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne are representing the plaintiffs and classes in the lawsuit. Erickson Kramer Osborne is also representing the plaintiffs in a lawsuit against Coinbase regarding the depeg of GYEN. The value of GYEN skyrocketed for a week after it was listed on Coinbase. The company then froze the accounts of some users. Many users lost a large amount of money in this case. Despite a fairly foreseeable danger of de-pegging, Coinbase is accused of negligent misrepresentation and not applying reasonable care in listing GYEN.
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