Coinbase, the top US exchange, is said to have been sued for providing trading for GYEN, a coin that aims to act as a stablecoin linked to the Japanese yen.
According to a complaint seen by Bloomberg, Coinbase has been accused of misleading customers into believing that GYEN is equal to the price of one yen.
After tremendous buying pressure, Gene It pegged it to the yen as it rose from $0.008 on November 13 to $0.04 on November 18, before returning sharply to parity on November 24.
According to Bloomberg, some investors in Coinbase did not understand that the coin was not trading on par with the yen and was designed to drop significantly to reach the currency peg.
“Investors placed buy orders thinking the currency, as advertised, was worth the yen, but the currencies they were buying were worth seven times more than the yen… Suddenly, the value of GYEN plummeted back to the peg – it fell 80% in one day. “
Coinbase has also suspended trading amid the volatility, preventing GYEN holders from selling their coins, resulting in losses of “unspeakable millions within hours,” according to the complaint.
A group of GYEN investors who led the lawsuit says,
“[Due to] Ignoring the fact that GYEN was not designed to hold a value tied to the yen, and Coinbase’s restrictions prohibiting investors from liquidating GYEN due to its decline, several hundred buyers lost huge sums, and some of them hundreds of thousands of dollars in just a few hours, is causing them grief, anxiety, stress and anger.”
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