Crypto exchange platform Coinbase has been slammed with a class-action lawsuit which claims that the platform was negligent in its listing of the TerraUSD stablecoin.
The lawsuit alleges that the platform failed to do its due diligence of Terraform Labs before listing TerraUSD. It also alleges that the platform misrepresented the risks of TerraUSD as an algorithmic stablecoin.
These allegations are based on a comparison of stablecoin data from other platforms including Robinhood, Gemini, and Kraken to Coinbase.
The conclusion was, “Rather than disclose the nature of TerraUSD as uncollateralized, controlled by an algorithm, and highly risky, Coinbase passed it off as just another stablecoin.”
The investment arm of the company, Coinbase Ventures was one of the largest investors of Terraform Labs. This adds to the list of motives of the platform for not disclosing TerraUSD’s volatility.
Law firms Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne are representing the plaintiffs and classes in this case.
This is the second such case filed against Coinbase. A month ago, a case was filed against Coinbase and GMO-Z.com Trust related to the de-pegging of the Japanese yen-pegged GYEN stablecoin in November 2021.
Read Also: Lawsuit Filed Against Binance.US for illegally Selling Terra Tokens
Coinbase is blamed for negligent misrepresentation and failure to use reasonable care in listing the GYEN despite a reasonably foreseeable risk of depegging.
