Singapore’s users file a class action lawsuit against Terraform Labs CEO of $57 million

The plaintiffs claim that Do Kwon knowingly knew about the vulnerabilities of the UST stablecoin

29.10.2022 - 11:15

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What’s new? 359 people filed a class action lawsuit in Singapore’s high court against Terraform Labs (TFL) co-founders Do Kwon and Nicholas Platias, as well as Luna Foundation Guard (LFG), a non-profit organization set up to support the Terra ecosystem. The plaintiffs allege that Kwon and TFL made false statements regarding the stability of the TerraUSD (UST) stablecoin, which lost its peg to the US dollar in May, causing the entire ecosystem to collapse. Users are seeking about $57 million in damages from the defendants.

Cointelegraph’s material

More details about the situation. The court document alleges that Kwon knew about “the structural weakness of algorithmic stablecoins”

“The Defendants made the said representations fraudulently either well knowing that they were false and untrue, or recklessly not caring whether they were true or false,” says the lawsuit.

Earlier, Interpol put Kwon on the international wanted list, and South Korean prosecutors issued a warrant for his arrest and froze about $40 million worth of the company’s cryptocurrency assets.

Terra’s private investors later began their search for Kwon on their own, as his whereabouts remain unknown. The team of contributors to the project believes that the head of TFL may be hiding in Dubai, Azerbaijan, Russia, Mauritius, or the Seychelles Islands. Kwon himself, however, says that he is not trying to hide, and law enforcement officials have simply made no attempt to contact him.

In addition, the representatives of TFL accused the South Korean prosecutor’s office of abuse of its power. According to them, from the legal point of view, LUNC is not a security, and therefore it is not subject to the country’s capital markets laws. The company believes the case is “highly politicized.”

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