Terra’s Do Kwon is facing yet another lawsuit

Do Kwon and others involved in the TerraUSD project are facing a $57 million class action lawsuit from aggrieved investors.

The Terra lawsuit alleges fraud

Do Kwon and associates face yet another lawsuit that could come with massive civil penalties.

according to The Wall Street Journal, Kwon is facing a class action lawsuit on behalf of investors who lost $57 million during the collapse of the TerraUSD stablecoin. These investors are now seeking their lost funds as well as aggravated damages.

The class action alleges that Kwon and others fraudulently misrepresented TerraUSD’s price stability. Investors “believed it [TerraUSD] would be a symbol that was stable by design [and] the price of which will always be linked to the US dollar,” the lawsuit states.

Additionally, investors believed the stablecoin would offer “attractive APY returns” when staked in Anchor Protocol—Terraform Labs’ lending and borrowing service.

However, the TerraUSD stablecoin’s pricing mechanism failed in May, causing the asset to lose its link to the US dollar and lose virtually all of its market value.

The lawsuit alleges that, despite promises, TerraUSD was not “stable by design,” was unable to maintain its price lock, and was unable to recover from losses.

It also claims that token holders did not have the ability to trade TerraUSD for the equivalent amount of Luna after the project’s exchange mechanism was disabled in May.

Finally, it is argued that Anchor was not “principal guaranteed” and did not provide a sustainable 20% return as promised.

Lawsuits are one of many

The lawsuit was filed in September, but went largely unnoticed until its coverage The Wall Street Journal Today.

In a statement to the newspaper, a Terraform Labs representative denied any wrongdoing. She dismissed TerraUSD’s collapse by stating that there is a “fundamental difference between a public market event and fraud” and added that Terra’s risks were publicly known.

The lawsuit is being handled by Drew & Napier, one of Singapore’s “Big Four” law firms. This applies to over 350 investors from Spain, Australia, Singapore and elsewhere.

It names Terraform Labs CEO Do Kwon plus company members Daniel Hyunsung Shin and Nikolaos Alexandros Platias as defendants. Terraform Labs and Luna Foundation Guard are also named as defendants.

Today’s newly published lawsuit is not the only case against the project and its members. Kwon and others also face other class action lawsuits from firms such as Bragar Eagel and Squire, Scott+Scott and Grant & Eisenhofer.

Kwon also faces criminal charges in South Korea. In September, Interpol issued a red notice against Kwon in an attempt to restrict Kwon’s movement internationally. His whereabouts are still unknown.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH and other digital assets.