📋 Overview

Your platform has received a demand letter or claim from a customer seeking compensation for losses related to a stablecoin depeg event. These claims typically allege misrepresentation, breach of contract, or failure to maintain adequate reserves. This guide helps stablecoin issuers and platforms build an effective defense.

🛡 Terms of Service

Your ToS risk disclosures and limitation of liability clauses are your primary defense against depeg claims.

📄 User Agreements

Documentation showing users acknowledged and accepted cryptocurrency volatility risks strengthens your position.

⚖ Regulatory Compliance

Evidence of compliance with applicable money transmission, securities, or commodity regulations supports good faith defense.

Common Claim Types

Claim Type Allegation Defense Strength
Misrepresentation Platform promised stablecoin would maintain peg Medium - depends on marketing
Reserve Fraud Reserves were misrepresented or inadequate Strong if audits documented
Algorithm Failure Algorithmic mechanism failed to maintain peg Strong with risk disclosures
Market Manipulation Platform or insiders caused the depeg Weak if evidence exists

🛡 Defense Strategies

Build your defense around these key legal arguments and factual foundations.

Terms of Service Risk Disclosures

Comprehensive ToS with explicit disclaimers that stablecoins may not maintain their peg, that cryptocurrency investments carry risk of total loss, and that past performance does not guarantee future results.

Key elements: No guarantee of peg, volatility warnings, liability limitations, no investment advice disclaimer.

User Acknowledgment Records

Documentation that users affirmatively acknowledged understanding risks before purchasing or holding stablecoins. Click-through agreements, separate risk acknowledgment forms, and quiz completions.

Best practice: Timestamped records showing user accepted risk disclosures and ToS before first transaction.

Reserve Transparency and Audits

Third-party attestations and audits showing reserves were properly maintained and disclosed. Proof that reserve information was publicly available and regularly updated.

Documentation: Audit reports, attestation letters, public disclosure records, reserve composition updates.

Market Forces Defense

Evidence that the depeg was caused by external market conditions, not platform mismanagement. Market data, trading volume analysis, and correlation with broader crypto market events.

Use when: Depeg occurred during broader market crisis, bank run dynamics, or coordinated attack.

Arbitration and Class Action Waiver

ToS provisions requiring individual arbitration and waiving class action rights. Motion to compel arbitration can resolve claims more favorably than litigation.

Strategy: File motion to compel arbitration, select favorable arbitration forum, limit discovery exposure.

⚠ Marketing Material Review

Carefully review all marketing materials, social media posts, and public statements made about the stablecoin. Claims that contradict risk disclosures or promise guaranteed stability can undermine your defense. Identify and address any potentially problematic statements proactively.

📄 Key Documentation

Preserve and organize these documents to support your defense.

Immediate Preservation

  • Terms of Service history: All versions with effective dates and change logs
  • User agreement records: Claimant's acceptance timestamps and IP records
  • Risk disclosure documents: All versions presented to users
  • Reserve audit reports: All third-party attestations and audit letters
  • Marketing materials: Website archives, social media posts, promotional content
  • Claimant communications: All emails, support tickets, and correspondence

Regulatory Compliance Documentation

  • Money transmitter licenses and applications
  • SEC or CFTC correspondence and filings
  • State regulatory compliance records
  • AML/KYC program documentation
  • Internal compliance policies and procedures

💡 Litigation Hold Notice

Upon receiving a demand letter or claim, immediately issue a litigation hold notice to preserve all relevant documents. Failure to preserve evidence can result in adverse inference instructions and sanctions.

📝 Sample Response Letter

Platform Response to Stablecoin Depeg Claim
Re: Response to Demand Regarding [STABLECOIN NAME] Depeg Event Dear [CLAIMANT NAME/COUNSEL]: We have received your demand letter dated [DATE] regarding alleged losses from the [STABLECOIN NAME] depeg event of [DATE]. After careful review, we respectfully deny the claims set forth in your letter. CONTRACTUAL FRAMEWORK Your client agreed to our Terms of Service on [DATE], which include explicit provisions regarding cryptocurrency risks: 1. Section [X] states that stablecoins "may not maintain their intended peg value" and that users "assume all risk of loss." 2. Section [X] contains a comprehensive limitation of liability excluding consequential damages and limiting recovery to fees paid. 3. Section [X] requires binding individual arbitration and waives class action participation. Your client acknowledged these terms and separately confirmed understanding of cryptocurrency volatility risks before their first transaction. RISK DISCLOSURES Our platform provided extensive risk disclosures including: - Clear warnings that stablecoin values could fluctuate - Explanation of the stablecoin's mechanism and inherent risks - Regular reserve reports and third-party attestations - No representations that the peg was guaranteed MARKET CONDITIONS The depeg event occurred during [DESCRIBE MARKET CONDITIONS], which caused widespread volatility across cryptocurrency markets. Our stablecoin mechanism functioned as disclosed; market forces beyond our control caused the price deviation. DEMAND FOR ARBITRATION Pursuant to Section [X] of our Terms of Service, any dispute must be resolved through binding arbitration. If your client wishes to pursue this matter, we demand arbitration before [AAA/JAMS] in accordance with our agreed terms. We reserve all rights and defenses. This letter is for settlement purposes only under FRE 408. Sincerely, [PLATFORM NAME] [AUTHORIZED REPRESENTATIVE]

🔗 Related: Customer Demand Letters

Understanding what customers are advised to include in their demand letters can help you prepare a stronger defense.

View Crypto Exchange Demand Letter Guide →

💰 Pricing

Professional legal assistance for responding to stablecoin depeg claims.

Legal Services

  • 📄 Demand letter: Flat fee $450
  • ⏳ Extended negotiation: $240/hr
  • 📊 Contingency: 33-40% for strong claims

Initial response letters include review of your ToS, risk disclosures, and user agreements, plus a customized response letter. Extended negotiation and arbitration defense billed hourly.

🚀 Next Steps

Day 1: Preserve

Issue litigation hold and preserve all relevant documents, including ToS versions and user records.

Day 1-3: Review

Analyze the claim, review claimant's agreement history, and identify key defense documents.

Week 1: Respond

Send initial response letter denying claims and asserting arbitration rights.

Week 2+: Defend

If claimant proceeds, file motion to compel arbitration or prepare arbitration defense.

Protect Your Platform

Get professional help defending against stablecoin depeg claims.

Schedule Consultation - $450

Resources

  • SEC: Stablecoin guidance and enforcement priorities
  • CFTC: Digital asset regulation framework
  • State regulators: Money transmission licensing requirements
  • AAA/JAMS: Arbitration providers for dispute resolution
📝 Need to write this type of letter? See our Demand Letter Guide →