Terraform Labs CEO accused of false statements about UST stability
The plaintiffs demand compensation from Do Kwon in the amount of the purchase value of the assets
20.06.2022 - 11:55
893
2 min
0
What’s new? A class action lawsuit has been filed against the head of Terraform Labs (TFL) Do Kwon in the US District Court in Northern California. He is accused of selling unregistered securities, as well as false statements about the stability of the algorithmic stablecoin TerraUSD (UST) and its backing token LUNA. The plaintiffs are seeking full recovery of investment losses from Kwon.
Details of the case. The lawsuit alleges that members of Luna Foundation Guard (LFG), a non-profit organization, misled investors by claiming that the fund’s reserve would be sufficient to protect assets. On May 8, stablecoin lost its peg to the US dollar, with UST and LUNA prices plummeting to almost zero in the days that followed. Developers and the community decided to create a new blockchain, Terra 2.0, with new LUNA tokens distributed to holders of old assets at launch on May 28.
The list of those who filed the lawsuit includes cryptocurrency hedge fund Three Arrows Capital (3AC), as well as Jump Crypto, Jump Trading, Republic Capital, Republic Maximal, Tribe Capital, DeFinance Capital, DeFinance Technologies, and GSR Markets.
The plaintiffs also claim that TFL did not register digital assets with the US Securities and Exchange Commission (SEC) in any way. Do Kwon and his company are being asked for compensation in the amount of the purchase value of the tokens and all legal costs.
Earlier, Terra’s 2 000 retail investors filed a class action lawsuit against the US arm of cryptocurrency exchange Binance. The platform was accused of using misleading advertising and selling UST as unregistered securities. The suit also alleges that Biannce.US was not registered as a broker-dealer or an exchange, which may be a violation of the Securities Act.
Useful material?
Telegram 
Twitter Incidents
The company is linking the incident to a compromised private key on a service wallet, rather than a smart contract exploit
May 22, 2026
Incidents
Following the incident, the project temporarily halted trading operations and node activity.
May 15, 2026
Incidents
The user spent weeks unsuccessfully trying to guess the password until Claude helped find an old wallet backup file
May 14, 2026
Crypto regulations
Authorities are introducing mandatory registration for companies handling cross-border crypto transactions
May 8, 2026
Incidents
According to Blockaid, the attack may have been carried out by the same hacker behind the 1inch Fusion V1 exploit.
May 7, 2026
Incidents
The attacker gained administrative access and altered contracts to drain user funds
Apr 30, 2026
Cryptocurrency rates
-
Bitcoin
$64 035
BTC
-4.04%
-
Ethereum
$2 551.16
ETH
+3.56%
-
BNB Smart Chain
$579.4
BSC
+1.23%
-
Ripple
$1.2
XRP
-1.36%
-
Dogecoin
$0.091453
DOGE
-1.92%
-
TRON
$0.160134
TRX
-1.59%
-
Zcash
$622.69
ZEC
+0.06%
-
Cardano
$0.200769
ADA
-5.95%
-
Stellar XLM
$0.207965
XLM
-8.13%
-
Polkadot
$3.32
DOT
+5.27%