Investors are suing Coinbase for its negative role in promoting and trading the GYEN stablecoin, which, in their opinion, turned out to be “anything but a stablecoin.”
To San Francisco federal court entered a class action lawsuit in which the American digital asset trading platform Coinbase and the Japanese company GMO-Z Trust, the issuer of the GYEN stablecoin, were accused of misleading investors about the stability of the crypto asset.
Recall that in December 2020, the New York State Department of Financial Services (NYDFS) issued permission to GMO-Z Trust Company Inc., a subsidiary of GMO Internet, to issue a stablecoin based on the US dollar and pegged to the price of the Japanese yen.
GMO-Z Trust President Ken Nakamura told potential investors that once approved by the regulator, the company will be able to legally issue GYEN in the US. However, according to the lawsuit, in November 2021, when Coinbase began trading GYEN, “the asset was untied from the yen almost immediately.”
“Investors placed orders on the exchange, believing that the value of the GYEN token, as Coinbase and GMO-z stated, is equal to the yen. But the tokens they bought were worth seven times more than the yen,” the lawsuit says.
When the price of GYEN suddenly dropped by 80% in one day, Coinbase froze trading in the stablecoin, thereby “aggravating the damage and limiting the ability of customers to sell the asset.” As a result, GYEN buyers “collectively lost millions of dollars in a matter of hours,” investors said.
The complaint comes a day after Coinbase shares and bonds tumbled to new lows, signaling investor skepticism about the cryptocurrency exchange’s financial outlook in a worsening bear market.
Kynikos Associates investment fund founder Jim Chanos called Coinbase shares a “bubble” in an interview and said he was selling them because the company couldn’t be profitable.
This is not the first class action lawsuit against the exchange. In mid-July last year, Coinbase shareholders accused the platform of providing investors with false information about the company’s financial position when placing shares on the Nasdaq stock exchange.
Source: Bits
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