BlocksInform
A federal judge dismissed a class-action lawsuit that alleged investors on Maker, one of the largest decentralized finance protocols, suffered some $8 million in losses because the platform misrepresented risks, according to a court document filed on Wednesday.
The “Black Thursday” lawsuit filed in April 2020 claimed that Maker-related entities including Maker Ecosystem Growth Foundation misrepresented collateralized debt positions on the platform as more secure investments than other assets because they required over-collateralization, CoinDesk reported at the time.
The Maker Ecosystem Growth Foundation was dissolved as part of a strategy helmed by founder Rune Christensen to decentralize the protocol, handing operations over to a decentralized autonomous organization called MakerDAO.
Read more: MakerDAO The Foundation is planning his own disappearance.
Justice Maxine M. Chesney of the United States District Court for the Northern District of California dismissed the case, Claiming that "Maker Growth [Foundation] is not an appropriate defendant since it has been dissolved, and therefore does not have the ability to be prosecuted" and that the "applicant has not alleged sufficient facts to substantiate each of his requests for redress."
That was the second amendment to the complaint.
Maker is a lending protocol, where users can withdraw loans in the platform’s native stablecoin dai (DAI) by pledging assets such as ether () as collateral. Borrowers are required to maintain some level of collateral to avoid liquidation. To counter the price volatility of cryptos, the originator requires that loans be over-collateralised, which means that borrowers must lock in assets of a greater value than their debt.
But Peter Johnson, the principal applicant, claimed that the manufacturer announced the overabundance policy as a protective measure that capped losses at 13% and that the guarantee would be back to the users. When the price of eth fell sharply in March 2020 during a market-wide crash, his and many other positions on the platform were liquidated, Johnson said.
Read more: MakerDAO Users Sue Stablecoin Transmitter Post 'Black Thursday' Losses.
The lawsuit alleged that the investors incurred losses amounting to $8.3 million and claimed $20 million in punitive damages and compensation.
Requesters can amend the complaint and file a third draft until March 17, "because it has not been demonstrated that the aforementioned deficiencies cannot be corrected," the judge said.
$23,152.65
$1,608.02
BNB$301.81
XRP$0.37786648
$12.80DISCLOSURE
Please note that our privacy policyterms of usecookiesdo not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk reporters are not permitted to buy titles on DCG.
