Terraform Labs founder faces a new lawsuit from investors
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Answer Terraform Labs founder faces a new lawsuit from investors
Do Kwon, founder of Terraform Labs, is now a party to a lawsuit brought by more than 350 aggrieved investors, who lost nearly $57 million in the UST unpegged event.
The class action alleges that Do Kwon and his subordinates intentionally misrepresented the price stability of the digital stablecoin UST.
The lawsuit states that investors believed Terra USD would be a stable digital currency by design and that its price would always be pegged to the dollar.
Investors believe that Do Kwon intentionally built the Anchor Protocol, a high interest rate Defi protocol to lure customers to buy more UST.
Anchor Protocol was essentially a lending and borrowing platform that started with an interest rate of 20% and is the first of its kind in the industry.Read:Cryptocurrency exchange BitMEX fails to acquire a German bank
In May 2022, the stablecoin mechanism failed and plunged into a death spiral, effectively losing all of its market capitalization in minutes.
The lawsuit alleges that despite UST’s failure, Do Kwon continued to raise hopes by tweeting for people to calm down, saying:
Everything is under control.
A spokesperson for Terraform Labs, who is also a defendant in the lawsuit, said in a statement that he has committed no wrongdoing and will defend himself until proven innocent.
“Do Kwon” faces multiple lawsuits:
The famous founder of Terraform is now facing several prosecutions and legal threats since the collapse of the digital stablecoin UST.
In September, South Korean authorities reportedly issued an arrest warrant for him, and even Interpol added him to its red list, thus asking law enforcement to locate and detain him if possible.
On the other hand, Do Kwon has been very active on social media and once tweeted that he makes no effort to hide from everyone.
It also gave the impression of working on the latest Terra blockchain, called Luna 2.0, and that there are new exciting developments coming.Read:Find out the size of companies’ losses since the start of the recent decline in cryptocurrency prices
He also appeared on a few select talk shows and podcasts where he vehemently denied resorting to any kind of fraudulent activities.
The Terra founder received an order from the South Korean Ministry of Foreign Affairs on October 6 to bring in his passport or risk having it revoked.
Currently, Do Kwon’s whereabouts are unknown and he is allegedly a fugitive and is not complying with legal authorities.
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