Customers suffered millions of dollars in losses due to the role of the exchange in trading and promoting the gyen stablecoin, according to a lawsuit. The potential class-action lawsuit was filed by Kenneth and Hussien, accusing the largest US exchange of misleading customers.
Customers suffered millions of dollars in losses due to the role of the exchange in trading and promoting the gyen stablecoin, according to a lawsuit.
The potential class-action lawsuit was filed by Kenneth and Hussien, accusing the largest US exchange of misleading customers.
They claim that the stable coin was pegged to the Japanese yen even when they knew that the peg was prone to break. They claimed in their filing that the information was not given to investors.
The ethereum-based token lost its peg soon after it started trading. Its value plummeted after it jumped to several times higher than the Japanese currency.
Customer accounts were frozen and trading in the stablecoin was stopped due to technical reasons.
The complaint said that investors placed orders thinking the coin was worth the same as the Japanese currency, but the token they were purchasing was worth seven times more than the Japanese currency.
As the gyen's value was cratering back to the yen, Coinbase compounded the harm by restricting many customers' ability to sell the asset, then abruptly suspended all trading of the asset without explanation.
In a matter of hours, buyers collectively lost millions of dollars, according to the complaint.
The filing said that Donovan paid $335,000 to buy 38 million token that lost 80% of their value within hours of the order being placed. The 13 million token bought by Kassfy dropped 40% in value.
They want their suit to be given class-action status. The trading freeze led to an online campaign for refunds by customers of Coinbase.
It was a difficult week for the company as its stock plummeted amidst the market crash. After disappointing first-quarter earnings on Wednesday, the shares of Coinbase plummeted 26.40%.
The lawsuit was filed in district court for Northern California. Insider did not get a response from the two companies.
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