Because Kwon, Terraform Labs and investment funds LUNA-UST were simultaneously sued for “defrauding” investors into participating in the LUNA-UST model because it is essentially a security.
Due to Kwon, Terraform Labs and investment funds LUNA-UST being sued
An American citizen filed a lawsuit against Terraform Labs, founder Do Kwon, and some of the investment funds that founded the Luna Foundation Guard over the collapse of the LUNA-UST model in May, claiming that the applications This person violated federal securities laws and defrauded investors.
The defendants include Terraform Labs and founder Do Kwon, investment funds Jump Crypto, Jump Trading, Republic Capital, Republic Maximal, Tribe Capital, DeFiance Capital (misspelled as ‘DeFinance Capital’), GSR Markets and Three Arrows Capital.
The plaintiff is Mr. Nick Patterson, who lives in Illinois (USA), has filed a lawsuit with the Northern District Court in the hope of being able to fix the damage and punish the guilty parties.
The plaintiff stated that “Terra tokens” (collectively LUNA, UST and other coins of the Terra ecosystem) have many similarities to securities but are not promoted by Terraform Labs and investment funds as such.
In addition, the Luna Foundation Guard, an escrow fund created to guarantee the value of the UST stablecoin, deceived investors and made them believe that the fund had enough money to maintain the stability of the UST and the room prevent investors from withdrawing money.
However, between May 8 and May 15, the value of two coins LUNA and UST with a total capitalization of up to 60 billion USD collapsed completely because of market volatility, while Luna Foundation Guard did not “burned” more than 3 billion USD of security but still could not save the situation.
Later, Terraform Labs and Do Kwon launched a plan to “revive Terra” in the form of Terra 2.0 but without a stablecoin. The old project was renamed Terra Classic and still has the UST.
LUNA-UST investors in many countries are said to be preparing to launch lawsuits against Terraform and Mr. Do Kwon. Management agencies of many countries such as Korea and the US are also very interested in this case, showing that the legal challenges that individuals and organizations behind Terra (LUNA) and UST will increase in the near future. US crypto exchanges like Coinbase and Binance.US are also being sued for listing LUNA-UST.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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