A class action lawsuit was filed against Coinbase last weekend, alleging that the exchange was negligent in listing the TerraUSD stablecoin and alleging that it failed to disclose its financial relationship With Terraform Labs.
This is the second pending class action against Coinbase, which was filed last month in connection with GYEN's disengagement in November, Coin Telegraph reported.< /p>
Last Thursday's lawsuit alleges that Coinbase was negligent for failing to conduct due diligence on Terraform Labs prior to listing TerraUSD and misrepresenting TerraUSD's risk as an algorithmic stablecoin.
The lawsuit compares information on stablecoins provided by trading platforms Robinhood, Gemini, and Kraken with that of Coinbase and concludes that, rather than revealing the unsecured nature of TerraUSD, It is controlled by an algorithm, and so risky, that Coinbase has passed it on as just another stablecoin.
The lawsuit also alleges that Coinbase Ventures, the company's investment arm, was one of Terraform Labs' biggest backers, which was further motivation for the company not to disclose TerraUSD's volatility.< /p>
The plaintiffs and classes in the case are represented by the law firms of Melberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne. The latter company also represents plaintiffs in a case filed against Coinbase and GMO-Z.com Trust on May 13 related to the depegging of the stablecoin GYEN from the Japanese yen in November.
GYEN's value rose and then fell sharply a week after it was listed on Coinbase, causing the platform to freeze some user accounts. Some users also lost money - untold millions, according to the lawsuit - during the crash. The suit also alleges that GMO-Z.com failed in its duties to the plaintiffs and the class action in a number of ways, beginning with the design of the stablecoin.
Coinbase has allegedly engaged in misrepresentation, negligence and failure to use reasonable care in listing GYEN despite reasonably foreseeable risks of disengagement.
