- Interpol issued Red Notice to arrest Do Kwon.
- 350 investors filed a $57 million lawsuit against Kwon.
- Terraform Labs spokesperson says the firm would defend itself.
The Terraform Labs founder has been under a lot of legal fire lately after receiving a Red Notice issued by Interpol pursuing his arrest after Kwon failed to appear in court. In addition to the ongoing class-action lawsuits in the US, Kwon now faces another $57 million lawsuit.
350 investors in Singapore impacted by the collapse of TerraUSD joined hands and issued a lawsuit against Kwon seeking $57 million in compensation. While the lawsuit was filed on September 23, it has gained major media attention now.
It claims that Do Kwon portrayed “fraudulent misrepresentations” about TerraUSD stability. TerraUSD is an algorithmic stablecoin using financial engineering to sustain a one-to-one link with the US Dollar.
However, the mechanism failed in May and both TerraUSD and sister currency Terra LUNA lost their value and about $40 billion dollars. The collapse caused issues for many investors across the globe, contributing to a major cryptocurrency market shakeout.
The majority of the TerraUSD investors saved their currency on the Anchor Protocol platform which promised roughly 20% in annual yields. Anchor is also included in the lawsuit for calling it a “principal-protected stablecoin savings product.”
Nevertheless, Terraform Labs share a different sentiment towards the lawsuit since a spokesperson has stated that the Singapore-based company will defend itself as it has committed no wrongdoings.
The spokesperson further elaborated,
There is a fundamental difference between a public market event and fraud. The risks were publicly known and discussed, and the underlying code was open-sourced.
Furthermore, Do Kwon also denies committing any fraud as he believed in TerraUSD and has also lost money in the collapse.
Spanish Investor Julian Moreno Beltran lost over $1.1 million in the crash, while other lead claimants in the lawsuit, including Singaporean citizen Douglas Gan Yi Dong, claim to have invested hundreds of thousands of dollars in the collapsed cryptocurrency. Currently, they are represented by Singapore’s top law firm, Drew & Napier.
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