Compound DAO Sued For Traders Losing Less Than $100

According to a newly filed complaint class-action status, Compound DAO is one of eight defendants named in a case launched by three complainants who say they experienced losses after purchasing COMP tokens, which they contend are illegally issued by the defendants.

The case was filed in the United States District Court for the Northern District of California, San Francisco Division. Amanda Houghton, Susan Franklin, and Charles Douglas are listed as plaintiffs on behalf of other COMP token holders.

They claimed were harmed after purchasing COMP tokens, the native currency of DeFi lender Compound Finance. The action further claims that these losses were caused by the unauthorized selling of COMP tokens.

According to the court petition, Douglas purchased $75 worth of COMP tokens in January 2022 when they were trading at $130. The other plaintiffs purchased COMP tokens for $2 and $3, respectively.

Houghton and Franklin also received more COMP tokens for watching cryptocurrency advertisements on their Coinbase accounts. They earned $9 each, but these coins are now worth $1 each. The identified plaintiffs in the lawsuit only have $98 in COMP tokens as a cost basis.

Plaintiffs Gerstein Harrow LLP and Fairmark Partners LLP have petitioned the court to declare COMP to be a security. They further request that the court compel Compound DAO and the other defendants to cease selling these tokens, pay damages, and reimburse the plaintiffs’ legal bills.

The plaintiffs said that the price of COMP had subsequently plummeted and that the defendants were at fault.

The suit refers to Compound DAO as a general partnership. According to the complaint, the decentralized autonomous organization and its partners are in charge of the selling of COMP tokens as unlicensed securities. It further claims that the defendants made false and misleading claims regarding the possibility of benefitting through COMP token holdings.

Other defendants include Compound Finance co-founders Robert Leshner and Geoffrey Hayes, in addition to Compound DAO. Co-defendants in action included, among others, Bain Capital Ventures, Polychain Alchemy, and Paradigm Operations.

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