Coinbase is facing class action suits over unstable stablecoins GYEN, TerraUSD

Coinbase is facing class action suits over unstable stablecoins GYEN, TerraUSD

On Thursday, Coinbase was the subject of a class-action lawsuit. It claimed that the trading platform was negligent when it listed TerraUSD stablecoin. Also, it denied Terraform Labs its financial relationships. This is Coinbase’s second class-action lawsuit. Last month, a suit was filed against Coinbase in connection to the November depegging.

Thursday’s suit claims that Coinbase was negligent in failing to do due diligence on Terraform Labs prior to listing TerraUSD, and misleading TerraUSD’s risk status as an algorithmic stabilitycoin. The suit compared the information provided by Robinhood, Gemini, and Kraken on stablecoins to Coinbase’s and found that Coinbase referred to TerraUSD as “just another stablecoin” rather than revealing its nature as uncollateralized and controlled by an algorithm.

Coinbase Ventures, which is the investment arm of Terraform Labs was also named in the suit. This was an additional reason for TerraUSD to not disclose its volatility.

Related: Elon Musk is hit with a $258B Dogecoin lawsuit

Milberg Coleman Bryson Phillips Grossman, Erickson Kramer Ozborne are representing the plaintiffs and classes in this case. This firm also represents the plaintiffs in a case against Coinbase, GMO-Z.com Trust and Erickson Kramer Osborne on May 13. The case is related to depegging the Japanese yen-pegged GYEN stabilitycoin in November.

GYEN’s value shot up, then plummeted precipitously one week after it was listed on Coinbase. This caused Coinbase to temporarily freeze some accounts. According to the suit, some users also lost money during the incident. GMO-Z.com was accused of failing to fulfill its obligations to the plaintiffs and class in multiple ways. The suit began with the design of GMO-Z.com’s stablecoin.

Coinbase is accused of negligent misrepresentation, failure to use reasonable care when listing the GYEN, despite a reasonably foreseeable danger of depegging.

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