Customers of Coinbase have sued the exchange over the promotion and trading of GYEN, a stable coin that crashed. According to the report, customers of Coinbase filed a class-action lawsuit yesterday in a federal court in northern California. The lawsuit alleges that Coinbase and the Tokyo-based GMO-Z were involved in the lawsuit. The issuer of GYEN misled investors about the token's stability. There were millions of dollars lost by investors as a result of these losses.
The complaint pointed out that GMO-Z. com issued GYEN with a 1: 1 peg to the Japanese yen. After Coinbase listed and started trading it, the GYEN's value fell below that of the Japanese yen in November last year.
The complaint further noted that
The coin's value was as advertised, but the token they were purchasing was worth up to seven times more than the yen, according to investors. The GYEN's value plunged back to the peg just as it fell 80 percent in a single day. After the crash, customers were prevented from trading GYEN on Coinbase.
Following the 80% crash, Coinbase stopped trading of GYEN. The complaint alleges that the exchange exacerbated the harm already caused by denying customers the opportunity to sell the asset. In a few hours, GYEN holders on Coinbase lost millions.
The investors who filed the lawsuit asked to represent all GYEN investors. They did not specify how much compensation they wanted to receive.
The GYEN is trading at $0.007732 at the time of writing. This amount is equivalent to the level the Japanese yen is trading against the U.S. dollar.
The exchange's net revenue fell 53% to $1.165 billion, according to the report. The net loss was $430 million, according to the coinbase.
Sophia Zaller, a crypt underwriter at Relm Insurance, discovered a bankruptcy disclosure statement in the report. In the event of bankruptcy, the statement said that Coinbase could treat customers as general unsecured creditors. Zaller said that this is a red flag.
As a result of this, investors moved their funds off the exchange resulting in a sharp drop in COIN's price.