DeFi Giant Maker Emerges Victorious as US Judge Dismisses $28M Lawsuit Filed Against It by Crypto Investors

cryptonews.com:

A US judge has dismissed a class-action lawsuit against DeFi crypto lender Maker that alleged the platform misrepresented risks investors faced, leading to catastrophic losses of collateral on MakerDAO back in 2020. 

According to a court document filed on Wednesday, the “Black Thursday” lawsuit has been dismissed because Maker Foundation, which built the Maker protocol and created the initial supply of tokens, has been dissolved and is no longer "a proper defendant."

Set up in 2018, the Maker Growth Foundation announced it is turning over operations entirely to its decentralized autonomous organization (DAO), MakerDAO, in 2021. The move was always part of the protocol's roadmap in a bid to fully embrace decentralization. 

The judge also argued that the “plaintiff has failed to allege facts sufficient to support each of his claims for relief.” This was the second amended version of the complaint.

As reported, investors filed a class-action lawsuit against the Maker Foundation in March 2020, claiming that the company misrepresented the risks investors in the ecosystem faced. 

The complaint said that collateralized debt position holders lost $8.325 million when the value of the Ethereum that Maker held in collateral plummeted relative to the dollar-pegged stablecoin DAI in which those loans were held. 

The lawsuit, which named Peter Johnson as the lead plaintiff, alleged that the Foundation failed to properly warn about such risks. It said:

“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