Terraform Labs, Do Kwon faces yet another class action lawsuit
Important takeaways
- A class action lawsuit was filed against Terraform Labs, Do Kwon and a number of other crypto entities over the weekend.
- The lawsuit brings several charges, including rape against the defendants.
- Do Kwon also faces several lawsuits in South Korea as a result of Terra’s implosion.
Share this article
Terraform Labs and Do Kwon are accused, among other things, of misleading Terra investors and extortion.
The Terra lawsuit represents US retail investors
Terraform Labs and Do Kwon have received a new lawsuit in the US.
The class-action lawsuit filed in California late Sunday alleges that Terraform Labs and a number of other entities, including the company’s controversial CEO Do Kwon, Jump Crypto and Jump Trading, DeFiance Capital and bankrupt hedge fund Three Arrows Capital, are responsible for leading retail investors to purchase Terra ecosystem tokens at “inflated prices”, making or endorsing false or misleading statements, aiding and abetting, civil conspiracy, failure to register securities and extortion.
The filing requires anyone who has purchased Terra ecosystem tokens, including but not limited to the Terra blockchain’s native assets, LUNA and UST, between 20 May 2021 and 25 May 2022 to participate in the promotion.
Terra suffered a dramatic collapse in May when its algorithmic stablecoin, UST, lost its link to the US dollar, triggering a death spiral that wiped around $40 billion off the crypto market in a matter of days. Several major crypto players, including Terra backers Three Arrows Capital, were hit hard when LUNA crashed to zero and the market plummeted, resulting in a domino effect that spread across the industry.
Meanwhile, Kwon and Terraform Labs have been working on the fallout. Terra tried to revive itself with a forked blockchain that left out its failed algorithmic stablecoin design, but it struggled to gain any notable momentum, and the new LUNA token is now trading over 90% from its high. Kwon too faces several court cases from investors in South Korea and could be charged with running a Ponzi scheme. The South Korean parliament is too investigating the case.
The complaint submission is coming three weeks after prosecutors from South Korea and the United States met to share information about the many ongoing investigations into Terra’s collapse.
While Kwon is facing charges in South Korea, he is believed to be living in Singapore. Terraform Labs’ sole headquarters is also in Singapore after it shut down its South Korean subsidiary in May.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
