A non-profit blockchain-centered organization, Maker Foundation is facing a probable class-action lawsuit for allegedly neglecting to protect investors’ interests. The organization, which developed the MakerDao decentralized finance (DeFi) protocol was on Tuesday, April 14, reportedly charged before a District Court in the Northern District of California.
The lawsuit alleged that the foundation attracted its investors under false pretenses amounting to fraud.
The Plaintiff, Peter Johnson, accused the establishment of intentional misrepresentation and negligence. The lawsuit demands recompense of over $28 million from Maker Foundation if the suit gets certified by the court.
The MakerDao protocol suffered extensive losses on March 12, commonly described as Black Thursday in the digital currency market because of the massive liquidation in ETH prices experienced globally in the Open Finance Space.
As a result, several zero-bid auctions surfaced in MakerDao’s digital finances, leading to an incurred undercollateralised debt of about $2 million.
According to the lawsuit, Maker Foundation misrepresented the actual risk faced to CDP holders in order to secure more investors. In addition, the organization allegedly neglected its responsibilities to investors by allowing, or most likely, fostering the conditions that led to Black Thursday.
Johnson claimed the foundation’s alleged fraudulent conduct caused him losses well over 348 ETH of collateral, amounting to at least $42,000 as at March 12 and $54,600 today. According to Johnson, the total loss would not have exceeded that figure had Maker Foundation complied with its 13% compensation penalty, or prevented the zero-bid from occurring.
He seeks recompense of $8.325 million each, for three claims, and an additional $20 million punitive damages.
Johnson’s charges have yet to be certified by the courts as a class-action suit. The plaintiff is seeking the participation of other investors in pursuing the cause.
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