The crypto market has been a bit volatile recently, and this is especially true for stablecoins. Several tokens have depegged in the last week, including Coinbase’s GYEN.
This has caused many investors to lose a lot of money. They’ve also been forced to blame Coinbase for not fixing the problem quickly enough.
1. It was listed on Coinbase
GYEN is a stablecoin that is backed by the Japanese yen. It seeks to reduce price volatility by tying the value of its traditional currency to its digital asset in a 1:1 ratio.
Its platform is designed to offer a simple interface for users to receive and redeem their tokens. It allows the user to deposit a corresponding traditional currency, and the stablecoin is released at a 1:1 conversion rate upon validation of that transaction.
It was listed on Coinbase for the first time back in November 2018. According to crypto analysis firm Chainalysis, its transfer activity skyrocketed during that period.
2. It jumped to seven times the value of the yen
In November 2021, gyen crypto suddenly jumped to seven times the value of the yen. It became detached from the Japanese yen’s value it was supposed to track, and investors were caught off guard.
The complaint alleges that Coinbase never disclosed that GYEN was not designed to hold a value pegged to the yen. It also blocked users from selling off GYEN as its value tanked, the suit says.
The class action lawsuit is being brought by EKO, an investor group in the US. It claims that the GYEN stablecoin was misleading investors about its stability, leading to millions of dollars in losses.
3. It crashed
GYEN crypto is a new stablecoin, designed to be pegged to the value of the Japanese yen. It is meant to be a stable alternative to fiat currencies that are often volatile.
The GYEN stablecoin crashed in November, causing investors to lose billions of dollars. This is the latest in a string of stablecoins that have experienced volatility.
A lawsuit has been filed against Coinbase by a group of Californians that say the exchange misled them about the stability of GYEN. They also claim that Coinbase exacerbated the harm caused by the crash by keeping customers from selling their GYEN.
4. It was halted by Coinbase
GYEN crypto was halted by Coinbase on Tuesday, which means that you can no longer trade it. However, you can still buy it on exchanges, which is easy and quick – all you need is a smartphone or computer, an internet connection and some photo ID.
As a stablecoin, it’s backed by one Japanese yen and allows investors to trade on the Ethereum network without cashing out. It also claims to maintain a 1:1 fiat currency reserve with independent monthly audits.
A group of Coinbase customers have sued the exchange for misrepresenting the stablecoin’s stability and causing millions in losses. They claim that the exchange was aware of the token’s potential to lose its peg to the yen, but failed to disclose this to clients.
5. It was halted by GMO Trust
GMO Trust issued a regulated JPY stablecoin called Gyen. It’s backed by one-to-one fiat currency reserves and audited monthly by a recognized public accounting firm.
Its token is designed to facilitate near-instant hedging and redemption of digital assets to a traditional currency, enabling trading and settlement without the volatility associated with digital currencies. Unlike other digital asset payment solutions, GMO’s whitepaper says GYEN will not require a third-party intermediary for transactions.
It’s fully regulated by the New York Department of Financial Services and 100% fiat-backed. It’s also based on the Ethereum network, allowing for near-real-time issuance, redemption and transaction monitoring.