Coinbase has been slapped with a lawsuit by users following its listing and subsequent promotion of the GYEN token. According to several reports, the digital asset recently underwent a massive crash, causing investors enormous losses. The users argued that although Coinbase claimed that the GYEN token was a stablecoin, its movement in the market was very far from that. However, the said lawsuit involves both Coinbase and the issuer of the said stablecoin.
Investors claim the exchange connived with GYEN developers
In the released report, a class action lawsuit involving traders who bought the GYEN token was filed in California yesterday. The class-action suit claimed that both Coinbase and GYEN’s parent company knew the type of token but chose to mislead them. As a result of their actions, many investors encountered terrible losses in the crypto market.
According to the lawsuit, the GYEN token was created to be backed by the Japanese yen on a one-to-one basis. However, as soon as Coinbase listed the token, it lost its peg with the currency, trading way below its normal trading value. The filing mentioned that investors purchased the coin with prior information that it was pegged to the yen. However, upon purchase, they discovered that its value was way more than the yen. No sooner had they bought the tokens had its price declined seriously to a region around 80% over 24 hours.
Coinbase discloses disappointing Q1 result
On its part, Coinbase moved swiftly to disable the trade of the token after it discovered the massive decline. The lawsuit claimed that Coinbase enabled the incident by blocking access to the token. This caused them not to be able to sell their tokens, resulting in massive losses on their part. The investors listed in the sheet are currently pushing the lawsuit on behalf of all the investors on the platform affected by the GYEN issue. However, they have yet to seek compensation, as the case is still in its early stages.
Presently, the GYEN is mirroring the Japanese yen by trading against the dollar at $0.007732. This news is coming off a detailed Q1 earnings report that the crypto exchange published. In the information, Coinbase encountered massive losses in its net revenue, which took a hit of 53%. However, a clause caused issues in the market where Coinbase stated that it had the right to treat its users as unsecured creditors. This clause was inserted when the company had to go under due to a lack of funds. In a swift turn of events, the exchange started to lose users, with most of them dumping the high-flying COIN to cause a price dump.