On Thursday, Coinbase was slapped with a class-action lawsuit alleging that it was negligent in listing TerraUSD (UST) and failed to disclose its financial relationship with Terraform Labs. Thursday’s lawsuit alleges that Coinbase was negligent by failing to perform due diligence on Terraform Labs before listing UST and misreporting UST’s risks as an algorithmic stablecoin.
The lawsuit compares the token information provided by Robinhood, Gemini and Kraken to that of Coinbase, and concludes that “Coinbase did not disclose the uncollateralized, algorithmically controlled and high-risk nature of TerraUSD, but mischaracterized it as Another stablecoin.”
The lawsuit also claims that Coinbase Ventures, the firm’s investment arm, is one of Terraform Labs’ biggest backers, a big motivation for Coinbase not to disclose UST volatility.
The plaintiffs and class action attorneys in the case are law firms Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne. The latter is also the plaintiff’s attorney in a lawsuit filed on May 13 against GMO-Z.com Trust and Coinbase over the de-pegging of the yen-pegged stablecoin GYEN last November.