Stablegains is allegedly being sued for taking money from customers, and without their knowledge putting it in Anchor Protocol. Investors awoke to find that their USDC is now worth UST rates. Some have accused the company of skimming a percentage off of investors’ money, supposedly around $42 million.
A letter from a prominent law firm, Erickson Kramer Osborne, to Stablegains has surfaced online which indicates the lawsuit against the company for the inability to maintain and preserve all of their “entities” of communication and records.
According to sources, Stablegains halted all withdrawals on May 9th and users were unable to transfer their assets to other exchanges in order to get a better rate once UST had de-pegged. However, once the network was back online, Stablegains resumed its withdrawals. The company revealed the same via a tweet but mentioned something many were not expecting. Without prior knowledge, customers found that their USDC and USDT holdings were now redeemable for UST.
The company also said that they could not guarantee how much longer they could keep withdrawals open, as that would depend on the Terra network.
Given what has happened in regards to UST, investors, are furious. Many have taken to Twitter to express their anger.
It was also revealed that under that the last line of the company’s ‘Terms of Service”, it says,
“Under no circumstances that Shall Stablegains be liable to losses due to the exchange rate of UST to USDC at the time of processing your USDC withdrawal request.”
A legal route seemed to be the only way out for some of the investors, which has led to the letter reaching the offices of Stablegains.
The UST fiasco has sent waves into the crypto space. It has revealed many points of flaws in the system, but it came at the price of many innocent people who have lost large sums of life savings. The “UST disease” seems to have spread to more avenues than previously thought, and the damage is only now coming to light.