A Singapore-based court is set to hear a lawsuit filed by over 350 international investors against the co-founder of embattled Terraform Labs Do Kwon.
The investors claim to have lost about $57 million due to the collapse of the Terra blockchain and the subsequent crash of its native token Luna, the Wall Street Journal reported.
UST was supposed to be designed to be protected from the volatility of the cryptocurrency markets and acts as a store of value, being pegged 1:1 to the U.S. Dollar. The legal claim states that Kwon was aware of the “structural weakness” of the algorithmic stablecoin, but he made “fraudulent misrepresentations” and coaxed investors into buying the asset.
Douglas Gan Yi Dong and Julian Moreno Beltran, who claims to have lost TerraUSD valued at roughly $1.1 million, are leading the lawsuit.
According to court records, several additional claimants spent tens of thousands of dollars or more in TerraUSD and assert that they are entitled to claim for the loss and harm sustained in purchasing the UST tokens as well as unspecified “aggravated damages."
The Singapore-based Terraform Labs PTE Ltd, Nicholas Platias, the organization's former head of research, and the Luna Foundation Guard (LFG), a fund set up to assist the expansion of the Terra ecosystem, are also named as defendants in the complaint.
The case was filed on Sept. 23, and a hearing date of Nov. 2 has been set.
In a statement released to Benzinga, a spokesperson for Terraform Labs claimed that the company had done nothing illegal and would vigorously defend itself.
"There is a fundamental difference between a public market event and fraud. Terraform Labs and the Luna Foundation Guard committed no wrongdoing -- the risks were publicly known and discussed, and the underlying code was open-sourced. To that end, both parties intend to vigorously defend themselves against these baseless accusations. The facts are on our side," the spokesperson claimed.
The Terra ecosystem imploded in May this year, with more than $40 billion of investors’ wealth wiped out in a matter of weeks.
Also Read: Crypto Lender Hodlnaut First Downplayed Exposure To Terra Luna, Now Confirms A $190M Loss In Crash
Terra's collapse accompanied a massive crypto selloff, sending the prices of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and other top cryptocurrencies tumbling.
The crash led to the bankruptcies of high-profile crypto lenders Celsius (CRYPTO: CEL) and Voyager Digital as well as hedge fund Three Arrows Capital and prompted increased scrutiny of crypto investing and stablecoins from regulators across the world.
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