A new class-action lawsuit against DeFi giant the Maker Foundation alleges that the company misrepresented the risks investors in the ecosystem faced, leading to catastrophic losses of collateral on MakerDAO on March 12.
The complaint, which was filed in the Northern District Court of California on April 14, accuses three entities affiliated with Maker of negligence and intentional misrepresentation before investors, or “collateralized debt position holders.”
According to the complaint, collateralized debt position holders lost $8.325 million when the value of the Ethereum (ETH) that Maker held in collateral plummeted relative to the dollar-pegged stablecoin DAI in which those loans were held.
The risk of such a scenario was not clear to these investors, the complaint alleges, further criticizing Maker’s advertised decentralization:
“While misrepresenting to CDP Holders the actual risks they faced, The Maker
Foundation neglected its responsibilities to its investors by either fostering or, at the very least, allowing the conditions that led to Black Thursday, all after actively soliciting millions of dollars of investment into its ecosystem.”
The complaint asks for a minimum of $8.325 million in compensation and $20 million in punitive damages.