- Do Kwon and other members of Terraform Labs face class action lawsuits from over 350 investors.
- The lawsuit alleges that TerraUSD’s price stability and anchor protocol returns were misrepresented.
- Do Kwon is also facing criminal charges in South Korea. His current whereabouts are still unknown.
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Dogwon and others Terra USD The project faces a $57 million class action lawsuit from damaged investors.
Terra lawsuit alleges fraud
Do Kwon and his associates face yet another lawsuit that could carry large civil penalties.
according to 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 lost funds and exacerbated damages.
The class action lawsuit alleges that Kwon and others have falsely misrepresented TerraUSD’s price stability.Investors “believed that [TerraUSD] Be a stable token by design [and] Its price will always be pegged to the U.S. dollar,” the lawsuit text said.
Additionally, investors believed the stablecoin would offer “attractive APY returns” when staking on Terraform Labs’ lending and borrowing service, Anchor Protocol.
However, the TerraUSD stablecoin’s pricing mechanism failed in May, and the asset lost its peg to the US dollar, effectively losing all of its market value.
The lawsuit alleges that despite promises, TerraUSD was not “stable by design” and failed to maintain its price peg and recover from losses.
It also claims that after the project’s swap mechanism was disabled in May, token holders did not have the ability to swap TerraUSD for the same amount of Luna.
Finally, Anchor claims it was not “capital guaranteed” and did not deliver the promised sustainable 20% yield.
lawsuit is one of many lawsuits
The lawsuit was filed in September, wall street journal today.
In a statement to the newspaper, a Terraform Labs representative denied any wrongdoing. She dismissed the TerraUSD collapse, saying there is a “fundamental difference between an open market event and a scam,” adding that Terra’s risks were publicly known.
The case is being handled by Drew & Napier, one of Singapore’s ‘big four’ law firms. This concerns her over 350 investors from Spain, Australia, Singapore and more.
It names Terraform Labs CEO Do Kwon and company members Daniel Hyunsung Shin and Nikolaos Alexandros Platias as defendants. Terraform Labs and Luna Foundation Guard are also named as defendants.
The newly publicized lawsuit today is not the only lawsuit against the project and its members. Kwon and others are also facing class action lawsuits from companies including Bragger Egel & Squire, Scott + Scott and Grant & Eisenhofer.
Kwon is also facing criminal charges in South Korea. In September Interpol red notification Against Kwon in an attempt to restrict Kwon’s international movement. His whereabouts are still unknown.
Disclosure: At the time of writing, the author of this work owned BTC, ETH, and other digital assets.