A class action lawsuit has been filed against BProtocol Foundation and Bancor DAO, led by Hoppin Grinsell. The suit alleges that the companies violated federal and state laws by offering and selling investment contracts to Bancor liquidity providers without registering under federal securities laws as an exchange or broker-dealer.
Bancor, a DeFi liquidity protocol, introduced impermanent loss protection insurance for its second version of the investment product, attracting liquidity providers to invest over $2.3 billion. However, the lawsuit claims that Bancor's crypto assets were insufficient to meet its obligations.
In 2022, Bancor suspended the impermanent loss protection following large withdrawals, leaving liquidity providers exposed to losses they were promised to be protected against.
Through conferences and interviews, Bancor and its representatives targeted US investors, the lawsuit alleges.
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