Another $57 million class action lawsuit was recently filed in Singapore against Terra co-founder Do Kwon. The lawsuit brought by more than 350 UST investors alleges Kwon and others made false statements on the UST.
More than 350 resentful investors who lost over $57 million in the UST de-pegging incident have filed a lawsuit against Do Kwon, the creator of Terraform Labs.
In the class action case, it is alleged that Kwon and his staff purposefully misrepresented the UST stablecoin’s price stability. According to the complaint, investors “believed that [Terra USD] would be a token that was stable by design [and] whose price would always be pegged to the US Dollar.”
Investors believe that Do Kwon intentionally built the Anchor Protocol, a high-interest Defi protocol to attract customers to buy more USTs. Anchor Protocol is essentially a lending and borrowing platform that starts at 20% interest – an industry first.
The stablecoin system, however, broke down in May 2022 and entered a death spiral, destroying almost all of its market value in a matter of minutes. The lawsuit asserts that after UST’s failure, Do Kwon continued to instill optimism by tweeting that “all was under control” and urging people to calm down.
In a statement, a Terraform Labs representative, who is also a defendant in the complaint, insisted that the company did nothing illegal and that it would hold itself harmless until proven innocent.
As updated, Do Kwon has been the target of numerous legal actions and threats since the collapse of the Terra blockchain ecosystem in May.
South Korean authorities have been working to investigate the crypto crash in recent months. They issued an arrest warrant for the Terra co-founder in September, which was subsequently removed, and Interpol added Kwon to its Red Notice list, asking law enforcement to locate and have the possibility of detaining him.
As for Do Kwon, he is still active on Twitter and always insists that he “doesn’t run away” and “has nothing to hide”. However, he kept his location a secret. According to Do Kwon’s fugitive investigation team, many have confirmed that he is hiding in Dubai due to the country’s crypto-friendly policy.
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