Coinbase Global Inc. was sued for its involvement in the trading and promotion of stablecoin cryptocurrency.
According to a proposed class-action complaint filed in federal court in northern California, the GYEN token issuer and the digital asset trading platform were accused of misleading investors about the stability of the GYEN token. This led to losses of millions of dollars.
This complaint was made after Coinbase bonds and shares plunged to new lows. It signals investor scepticism regarding the prospects for the crypto exchange in an ever-deteriorating bear market.
Stablecoins, unlike Bitcoin, is backed by hard assets. GYEN was issued by Tokyo-based GMOZ.com Trust Co. Its value was reportedly tied to the Japanese yen.
According to the lawsuit, Coinbase began trading GYEN in November 2021. However, the asset “immediately came untethered from the yen” at that time.
According to the complaint, “Investors placed orders believing that the coin’s worth was equal to the Japanese yen but the tokens they were buying were worth seven times as much as the yen.” “Just as abruptly, the GYEN value plummeted back to the peg — dropping 80 percent in a single day.”
Coinbase stopped trading the asset after the price plummeted, and “compounded the damage by restricting many customers’ ability to sell it,” the investors claimed. GYEN purchasers lost “untold millions” in just a few hours.
GMO-Z and Coinbase didn’t respond late Thursday to our requests for comment.
Investors are asking for representation of a class GYEN purchasers. They also seek unspecified damages.
Donovan v. Coinbase Global Inc. 22-cv-012826, U.S. District Court Northern District of California (San Francisco).
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