News

Defi Stablegains Project Sued For Deceiving Investors By Promoting UST As Safe

Key Points:

  • Stablegains sued for customer losses following exposure to Anchor Protocol and the collapse of UST last year.
  • They falsely advertised UST as a safe investment.
  • The platform transferred all client funds to the Anchor Protocol without their knowledge or consent.
Stablegains, a DeFi project invested by YC, was sued in a California court for allegedly misleading investors and failing to comply with securities laws.

Plaintiffs Alec Ohanian and Artin Ohanian filed the lawsuit in the United States District Court for the Central District of California on February 18.

They allege that Stablegains transferred all customer funds to Anchor Protocol without the customer’s knowledge or consent.

“As an early supporter of and investor in TFL [Terraform Labs], Stablegains is intimately familiar with UST and LUNA. Stablegains, Inc. falsely advertised UST as a safe investment.”

The complaint reads.

The Anchor protocol offers up to 20% yield on the Terraform Labs algorithmic stablecoin, Terra USD (UST). However, the protocol only provides a 15% gain to its customers, pocketing the spread over the yield offered by the Anchor Protocol.

The complaint adds that the company was not registered with the SEC as a stock exchange or a broker-dealer. And after Terra fell, Stablegains changed its website and promotional material, removing content promoting UST as “safe” and “fiat currency supported.”

Instead of liquidating assets and returning funds to customers, this protocol “retains the majority of depreciated user-deposited assets, unilaterally choosing to redirect them to Terra 2.0”. On May 22, Stablegains discontinued service, applications, and support for the Anchor Protocol, requiring users to withdraw their funds.

Reportedly, Y Combinator participated in a $600,000 funding completed by Stablegains in December 2021 and a $3 million financing completed in April 2022. According to the news in May 2022, they were also sued after this protocol embezzled customer funds and invested in Anchor, causing a considerable loss. They exchanged user USD for UST.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Foxy

Coincu News

Victor

Recent Posts

Bitcoin Trader Turned $100M in His 20s—Now Reveals 5 Altcoins to Build a $50M Portfolio, With Memecoins Leading the Way!

As Bitcoin reaches unprecedented heights and the market surges, he's highlighting five altcoins poised for…

36 minutes ago

Which Crypto Will Explode in the 2024-2025 Bull Run?

With the crypto market reaching new peaks, many are eager to discover digital currencies poised…

41 minutes ago

Dogecoin and Shiba Inu Approach $1, but All Eyes Are on XYZVerse’s Push to $10!

XYZVerse, blending sports passion with meme energy, is set to make a significant impact, uniting…

49 minutes ago

Will Bitcoin Crash or Soar Past $105K in 2024?

Will Bitcoin Crash?" seems to be one of the most controversial questions, as the price…

2 hours ago

The Best Crypto for Passive Income? 10% Weekly Gains and 20% Final Surge—Qubetics Mirrors Cosmos’ Early Success!

There’s always that one coin people wish they hadn’t overlooked. For many, Cosmos ($ATOM) is…

3 hours ago

Cosmos Developer Interchain Foundation Sold 3000 ETH Today

Cosmos Developer Interchain Foundation sold 3000 ETH from its ICO today, totaling 21,600 ETH sold…

3 hours ago

This website uses cookies.