Source: Law360According to the plaintiffs, who filed the suit in May 2023, Bancor deceived investors about its impermanent loss protection mechanism for liquidity providers and also claimed its token was an unregistered security. They said Bancor’s ILP operated at a deficit and tried to cover by launching a new product, v3, which promised “some of the most competitive returns anywhere […] without asking users to take on any risk.”Impermanent losses occur within DeFi automated market maker models when liquidity providers deposit assets into a pool, and one of the tokens loses value against another in the pool. Bancor paused impermanent loss protection, citing “hostile” market conditions in June 2022.
A Texas federal judge has entered a default judgment against Bancor DAO, which operated the decentralized finance platform Bancor, after it failed to respond to an online summons. Judge Robert Pitman issued the judgment after Bancor DAO did not appear to defend itself following a summons that was posted on the DAO’s forum in January 2024.“Defendant Bancor DAO has failed to answer or otherwise defend itself within the time allowed, and that plaintiffs have demonstrated that failure,” wrote district court clerk Philip Delvin on March 13.
The plaintiffs said that the DeFi platform “does not appear to be registered in any jurisdiction and has no physical office location, mailing address, officers, directors, or appointed agents.”Bancor is an onchain liquidity protocol that enables automated, decentralized exchange across blockchains.
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Author / Journalist: Cointelegraph by Martin Young
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