Coinbase Sued by Customers Who Lost “Untold Millions” to Little-Known Crypto Project: Report

Coinbase Sued by Customers Who Lost “Untold Millions” to Little-Known Crypto Project: Report

Leading U.S. crypto exchange Coinbase is reportedly being hit with a lawsuit for enabling trading of GYEN, a coin designed to act as a stablecoin pegged to the Japanese yen.

According to a complaint from Bloomberg, Coinbase is accused of misleading customers into believing that GYEN is priced at one yen.

After overwhelming buying pressure, GYEN lost its peg to the yen as the yen surged from $0.008 on November 13th to $0.04 on November 18th before sharply returning to parity on November 24th.

According to Bloomberg, some investors on Coinbase have failed to understand that the token does not trade par with the yen and should fall drastically to meet its peg.

The complaint states,

“Investors abandoned orders believing that the coin’s value was equal to the yen as advertised, but the tokens they bought were worth up to seven times the yen… Just as suddenly, the value of the GYEN plunged again on the clip – it fell 80% in one day.”

Coinbase also froze trading amid volatility that prevented GYEN holders from selling their coins, resulting in losses of “untold millions in a matter of hours,” according to the complaint.

Says a group of GYEN investors leading the lawsuit,

“[Due to] the omission of the fact that GYEN was not designed to hold value pegged to the yen and Coinbase’s restriction prohibiting investors from liquidating their GYEN when it crashed, several hundred buyers lost huge sums, some lost Hundreds of thousands of dollars in just a few hours, causing them heartache, fear, stress and outrage.”

On Nov. 19, Coinbase said the crypto exchange stopped Activities with GYEN and Power Ledger (POWR) for technical reasons.

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Featured image: Shutterstock/Tithi Luadthong

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