Top US crypto exchange Coinbase has reportedly been hit by a lawsuit for providing trading for GYEN, a coin intended to act as a stablecoin pegged to the Japanese yen.
According to a complaint seen by Bloomberg, Coinbase is accused of misleading customers into believing that GYEN was equal to the price of one yen.
After overwhelming buying pressure, GYEN lost its peg to the yen as it rose from $0.008 on Nov. 13 to $0.04 on Nov. 18, before returning sharply to parity on Nov. 24.
According to Bloomberg, some investors on Coinbase failed to understand that the token did not trade equal to the yen and was designed to drop drastically to reach its peg.
The complaint states,
“Investors placed orders assuming that the coin’s value, as advertised, was equal to the yen, but the tokens they bought were worth up to seven times the yen… Just as suddenly, the GYEN’s value plunged back to the peg – an 80% drop in one day.”
Coinbase also froze trading amid the volatility, preventing GYEN holders from selling their coins, leading to losses of “untold millions in a matter of hours,” according to the complaint.
Says a group of GYEN investors at the forefront of the lawsuit,
†[Due to] omitting the fact that GYEN was not designed to hold a value pegged to the yen, and Coinbase’s restriction prohibiting investors from liquidating their GYEN as it plummeted, several hundred buyers lost huge sums, some lost hundreds of thousands of dollars in just hours, causing them grief, fear, stress and outrage.”
On November 19, Coinbase said that the crypto exchange stopped activities with GYEN and Power Ledger (POWR) due to technical reasons.
Check Price Promotion
Don’t miss a beat – Sign up to receive crypto email alerts straight to your inbox
follow us on TwitterFacebook and Telegram
Surfing the daily Hodl mix
Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making any risky investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and transactions are at your own risk and any losses are your responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Tithi Luadthong