A group of aggrieved Singaporean investors in the infamous Terra project have dragged key figures involved in the project to court over charges of false representations about the project’s stablecoin. The four parties in the defense include Do Kwon, Luna Foundation Guard (LFG), and Nicholas Platias, a founding member of the project.
The class action lawsuit was brought by 359 investors before a Singaporean court on the grounds that “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.”
The claimants are seeking $57 million as damages for losses suffered during the de-pegging of TerraUSD (UST) from the U.S. dollar. Per the court documents, the investors said Do Kwon was aware of the “structural weakness of algorithmic stablecoins” and failed to take proper precautions to safeguard their investments.
The collapse of Terra in May had a contagion effect which the virtual asset industry is still reeling from. The implosion can be linked to the collapse of Three Arrows Capital (3AC), Celsius, Vauld, and Zipmex, leading to losses running into billions of dollars.
A Terra spokesperson said in a statement that it would not be defending itself in the lawsuit but strongly denied the allegations of the claimant.
“There is a fundamental difference between a public market event and fraud,” said the spokesperson. “The risks were publicly known and discussed, and the underlying code was open-sourced.
The case has been slated for hearing on November 2 with Jullian Moreno Beltran, an investor who lost $1.1 million, leading the claimants.
Multiple cases with the law
Since the implosion, Do Kwon has faced a difficult time with the law and is currently juggling multiple court cases in different jurisdictions worldwide. The U.S. Securities and Exchanges Commission (SEC) is investigating Terra for a potential breach of securities laws while Kwon faces a class-action lawsuit in the United States.
South Korea’s law enforcement agents have issued a warrant for his arrest, and the Ministry of Interior voided his passport to lure him out to face charges of violating the country’s capital market legislation. Kwon has repeatedly denied that he was on the run, but as his whereabouts remain unknown, Interpol was forced to issue a “red notice” to its member countries.
Kwon has stated that he is innocent of the claims of being a fraud, noting that he lost a fortune in the implosion back in May.
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