Stablegains, a returns platform for decentralized finance, has been sued in California court for allegedly cheating investors and breaking securities laws. The lawsuit also featured Anchor Protocol behind altcoin ANC. After the development, the ANC value decreased. Here are the details…
Significant lawsuit emerged for altcoin
Plaintiffs Alec and Artin Ohanian in the federal lawsuit filed Feb. 18 in the Central District of California allege that defunct DeFi platform Stablegains transferred all of its customers’ money to Anchor Protocol without their consent or knowledge. Using Terraform Labs’ Terra USD (UST) algorithmic stablecoin, Anchor Protocol was delivering returns of up to 20 percent. Compared to the returns provided by Anchor Protocol, Stablegains promised a 15 percent gain to its consumers.
Plaintiffs also allege that UST is a security and that Stablegains violates federal securities laws. According to the lawsuit, the company was neither registered with the US Securities and Exchange Commission (SEC) as a stock exchange nor as a broker-dealer. Ohanian claimed that the May collapse of the UST ecosystem had disastrous consequences for consumers of Stablegains. When UST withdrew from the dollar in May, it triggered widespread sell-off in the DeFi and crypto markets, resulting in a loss of approximately $18 billion in the Terra/Luna ecosystem.
Allegedly, after the crash, Stablegains changed its website and advertising materials that had previously promoted UST as “safe” and “fiat powered”. He admitted that the UST was none of these things, as alleged in the case. Instead of liquidating assets and reimbursing customers, Stablegains “held most of the devalued assets deposited by its users and unilaterally chose to divert them to Terra 2.0”.
ANC value dropped
Launched in August 2021, Stablegains closed on May 22. Anchor Protocol has terminated its services, apps, and support, prompting users to withdraw their funds. As reported, Stablegains was facing a similar lawsuit at the time. The specific amount sought for compensation was not detailed, but the plaintiffs sought prosecution. On February 16, the SEC sued Terraform Labs and its founder, Do Kwon, for allegedly “arranging a billion-dollar crypto-asset securities scam.”
After the latest development, the value of ANC has lost close to 17 percent. As we reported on Kriptokoin.com, Binance announced its plan to delist ANC in the morning. So, behind the drop in the altcoin’s value is this delist news. At the time of writing, ANC has dropped from $0.049 to $0.038.
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