Maker (MKR)
$344.09 (0.17 %) View coin
14 April 2020

MakerDAO receives class-action lawsuit from victims of Black Thursday's losses

After millions of dollars worth of ETH collateral was auctioned off for free during Black Thursday's failures, one user is suing the foundation for $28.3 million accusing them of negligent and intentional misrepresentation of the risks of using the protocol. Users were led to believe the maximum loss of depositing collateral would be the liquidation penalty, however, this wasn't the case when the Ethereum network became too congested for liquidators to successfully purchase the collateral. The plaintiff expects 1,000 members to join the suit seeking $8.3 million from the losses plus punitive damages up to $20 million.

Why it matters - Despite the intention to dissolve the Maker Foundation, there remains substantial centralization risk around the existing organization that has raised capital and employed key contributors to the protocol. If this lawsuit were to find the Foundation liable for these losses it could significantly hamper their ability to execute on their roadmap before their planned dissolution. - A Governance Poll was recently held to assess whether or not the Foundation should compensate vault holders who faced losses on Black Thursday. With 65% of voters choosing Yes, further effort will be made to decide an exact compensation plan. If that plan is accepted, the lawsuit may have a harder time fighting their case as users will have been paid out already.

In the weekly governance call, CEO of the Maker Foundation Rune Christensen presented the Self-Sustaining MakerDAO Initiative that would result in the dissolution of the Maker Foundation, the key entity leading development and governance of MakerDAO. As part of the new Governance Paradigm, Rune disc...
In the midst of extreme market-wide turmoil, MakerDAO is facing one of its biggest challenges to date. The main form of collateral in the system, Ether, has dropped over 30% in a 24-hour timeframe marking one of the worst days in its short history. This has triggered an unprecedented wave of liquida...
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