Robert Steinadler, 5 months ago
Terra Labs started with big dreams and high hopes for decentralized finance and the way the world would issue and interact stablecoins in the future. After UST collapsed in May a terrible contagion effect brought down many players in the crypto industry. First and foremost, CeFi lenders like Celsius, BlockFi or Voyager. Now that the dust is settled the aftermath of Terra is not looking pretty either and the former founder and CEO Do Kwon is still at large. The general attorney in South Korea wants to have a word with him and even investors are searching for his whereabouts internationally.
What is the latest turn of events in Do Kwons case and how could this affect him in the future?
The legal claim of two lead claimants is that Do Kwon, Terra Labs as well as the Luna Foundation Guard made allegedly false claims and misrepresentations about UST. They argue that they trusted UST to be stable and constantly pegged to the US-Dollar. According to the filings both investors claim that Do Kwon knew that this stability was not to be achieved and damaged both of them by misrepresenting the features and the risk that was involved.
Together they demand with 348 other investors a total of $57 million in damages purchasing UST. The law suit was filed in Singapore at the end of September as a WSJ report suggests. With more parties pressing charges against Do Kwon and management associated with the Luna Foundation Guard and Terra Labs, the pressure on the fugitive CEO is increased.
It is important to understand that this law suit is not directly connected to any criminal charges against him. That being said, the outcome of this legal battle might influence investigations in South Korea where Do Kwon is still wanted by the general attorney.
His whereabouts are still unknown and Interpol has issued a red notice. There are some clues that he might be in Dubai, but investigators cannot be too sure about that. If the plaintiffs succeed the court in Singapore could possibly order remaining assets to be frozen. This could affect Do Kwon, management as well as the LFG and Terraform Labs who are also defendants of this case.
The defendants on the other hand claim that the allegations are not true and that they did not fraud investors and that the loss of the plaintiffs was due to a public market event.
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