Yield platform Stablegains sued for promoting UST as a 'safe' investment
Decentralized finance yield platform Stablegains has been sued in a Californian court for allegedly misleading investors and failing to comply with securities laws.
On Feb. 18, plaintiffs Alec and Artin Ohanian filed a complaint in the U.S. District Court for the central district of California.
In it they alleged that Stablegains, a DeFi platform launched in August 2021, diverted all of its customer funds to the Anchor Protocol without their knowledge or consent.
Anchor Protocol offered yields of up to 20% on the Terraform Labs algorithmic stablecoin, Terra USD (UST).
Stablegains offered a 15% gain for its customers, pocketing the difference from yields offered by Anchor Protocol.
The plaintiffs are also claiming that Stablegains broke federal securities laws, alleging that UST was a security:
The complaint added that the firm failed to register with the U.S. Securities and Exchange Commission either as a securities exchange or as a broker-dealer.
The Ohanians stated that there were “disastrous consequences for Stablegains’ customers,” following the collapse of the UST ecosystem in May 2022. UST de-pegged from the dollar causing a broader run on DeFi and crypto markets in May and an eventual loss of around $18 billion from the Terra/Luna ecosystem.
Following the collapse, Stablegains allegedly altered its website and promotional material touting UST as “safe” and “fiat-backed,” effectively conceding that UST was none of those things, the complaint stated.
Instead of liquidating assets and returning funds to customers, Stablegains , “retained the majority of the devalued assets deposited by its users, unilaterally opting to redirect them into Terra 2.0,” it added.
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