Do Kwon, the CEO and co-founder of Terraform Labs, is being sued by more than 350 international investors in a Singapore court. The investors claim to have lost $57 million in the collapse of the algorithmic stablecoin TerraUSD (UST) and its ecosystem.
The legal claim makes the statement that the UST stablecoin, which was pegged 1:1 to the U.S. Dollar, was supposed to act as a store of value but was not protected from the volatility of the cryptocurrency markets.
It also claims that the investors lost $57 million in a securities class-action lawsuit filed in Singapore. The plaintiffs claim that the company’s trading platform was bought by a Chinese entity through a so-called “speculative deal”, which is defined as an investment of more than 100 million dollars in a virtual currency.
The lawsuit is led by Julian Moreno Beltran, a citizen of Spain who claims to have lost about $1.1 million worth of TerraUSD, and a Singapore native, Douglas Gan Yi Dong. There are others that claim they are “entitled to a claim for loss and damages suffered as well as unspecified “aggravated damages” as they lost tens of thousands of dollars.
The plaintiffs are seeking damages from Kwon for failing to protect their investment from potential volatility in asset prices, failing to disclose risks related to these risks before making speculative trades, and failing to provide adequate disclosure for future investments The plaintiffs allege that during the time period when Terraform Labs was run by Kwon and his co-founder, he failed to disclose his investments as part of his business plan and failed to disclose any risks or uncertainties regarding his business plans.
The collapse was then followed by a massive crypto selloff, sending the prices of Bitcoin and other top cryptocurrencies tumbling. All of this carnage was also followed by the bankruptcies of high-profile crypto lenders Celsius and Voyager, as well as hedge fund Three Arrows Capital. Allegedly, Kwon knew of the “structural weakness” of the stablecoin but still continued to fraudulently misrepresent the asset, thus tricking investors into purchasing.
The allegations were denied by a Terraform Labs Spokesperson, with the spokesperson also stating that the company will continue to defend itself against the claims. In response, the spokesperson made the following comments:
“There is a fundamental difference between a public market event and fraud, the risks were publicly known and discussed, and the underlying code was open-sourced.”
Kwon has constantly shown a bit of belligerence event though his circle has gotten smaller. The Terra co-founder has had his top aid arrested and yet continues to post memes and rebuttals against any that stake he is in trouble. There are many looking for Do Kwon at the moment, especially Interpol as the international police branch has issued a red notice which calls on any and all
Currently, Kwon is wanted by South Korean authorities. The South Korean government issued an arrest warrant for Terraform Labs’ boss in September, charging him with violating the country’s capital markets act. Interpol also approved the South Korean prosecutor’s request to issue a red notice for Kwon. Kwon’s current location is unknown as the co-founder comes out of hiding every once in a while to deny reports or post memes about the situation. There are many who hope he is found and brought to justice, but currently, he is still free and maintains his innocence.
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