A Federal judge dismissed a class action lawsuit that alleged investors on Maker suffered some $8 million in losses during the March 2020 market crash because the platform misrepresented risks, according to a court document. sndr_krisztian reports
) as collateral. Borrowers must maintain a certain collateral level to avoid liquidation. To counter volatile crypto prices, Maker requires loans to be over-collateralized, meaning borrowers have to lock up a higher value of assets than their debt.
But Peter Johnson, the lead plaintiff, claimed that Maker advertised the over-collateralization policy as a safeguard that caps losses at 13% and that the collateral would return to users. When ETH’s price sharply dropped in March 2020 during a market-wide crash, his position and that of many others on the platform were liquidated, Johnson alleged.The suit alleged that investors suffered a total of $8.3 million in losses, and sought compensation and punitive damages of $20 million.
Plaintiffs may amend the complaint and file a third version until March 17, “as there is no showing the deficiencies noted above cannot be cured,” the judge said.
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