Yield platform Stablegains sued for promoting UST as a ‘safe’ investment
Decentralized financial yield platform Stablegains has filed a lawsuit in a California court for alleged misleading investors and non-compliance with securities laws.
On February 18, plaintiffs Alek and Artin Ohanyan filed a complaint with the US District Court for the Central District of California.
In it they supposed that Stablegains, a DeFi platform launched in August 2021, transferred all of its clients’ funds to Anchor Protocol without their knowledge or consent.
Anchor Protocol offered returns of up to 20% on Terraform Labs’ algorithmic stablecoin, Terra USD (UST).
“As one of the early supporters and investors of TFL [Terraform Labs], Stablegains is very familiar with UST and LUNA. In fact, Stablegains, Inc. falsely advertised UST as a safe investment.”
Stablegains offered their clients a 15% return, taking away the difference compared to the return offered by Anchor Protocol.
Plaintiffs also allege that Stablegains violated federal securities laws by claiming that UST was a security:
“Stablegains has clearly failed to comply with federal and state securities laws. Stablegains has not disclosed that UST is in fact a security.”
The complaint added that the firm failed to register with the US Securities and Exchange Commission either as a securities exchange or as a broker-dealer.
The Oganese stated that there were “disastrous consequences for Stablegains customers” following the collapse of the UST ecosystem in May 2022. $18 billion from the Terra/Luna ecosystem.
After the crash, Stablegains allegedly changed its website and promotional materials to advertise UST as “secure” and “fiat-backed”, effectively admitting that UST is none of those things, the complaint says.
Instead of liquidating assets and returning funds to customers, Stablegains “has retained most of the impaired assets deposited by its users, unilaterally choosing to redirect them to Terra 2.0,” he added.
We are decommissioning the Stablegains service. Please withdraw the remaining funds.
See the proposed schedule + letter from the team here: https://t.co/ebx4Z78sp1
— Stablegains (@stablegains) May 21, 2022
May 22 out of production its services, applications and support for the Anchor protocol by asking users to withdraw funds. According to Cryptooshala, a similar lawsuit was launched against Stablegains at the time.
SEC sues Do Kwon and Terraform Labs for fraud
The specific amount of damages was not specified, but the plaintiffs demanded a trial.
On February 16, the SEC filed a lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “organizing a multibillion-dollar cryptocurrency securities fraud.”
Credit : cointelegraph.com