A hearing is scheduled for Wednesday in Singapore on a lawsuit filed against Terraform Labs Pte. Ltd. chief Kwon Do-hyung on behalf of 359 multinational investors who lost about US$57 million in the collapse of Terra-LUNA.
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- The lawsuit, filed in Singapore’s high court on Sept. 23, claims that Do Kwon induced investors into purchasing then-called TerraUSD (UST, now TerraClassicUSD) with “fraudulent misrepresentations” and that Kwon was aware of the “structural weakness” of the algorithmic stablecoin, according to court documents provided by the Wall Street Journal.
- According to the official Judiciary website of Singapore, a follow-up hearing for the lawsuit is scheduled for Wednesday, Nov. 2.
- UST relied on a systematic algorithm involving another Terra cryptocurrency called Luna (LUNA, now Luna Classic) to maintain its U.S. dollar peg, where a creation of a UST token required a certain amount of LUNA to be taken out of circulation.
- The legal claim is led by Julian Moreno Beltran and Singapore native Douglas Gan Yi Dong. Beltran, who is a Spanish citizen, had about US$1.1 million worth of TerraUSD. Other defendants in the lawsuit are Terraform Labs and former Head of Research Nicholas Platias, and the Luna Foundation Guard (LFG), which is a fund for the Terra ecosystem.
- In a statement, Terraform Labs spokesperson rebutted the claims made in the lawsuit saying, “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,” WSJ reported.
- Kwon and Terra associates are also being chased by South Korean authorities on multiple charges including fraud and violation of the local capital markets law. Requested by the country, Interpol has sent out a “red notice” which asks global law enforcements to locate and provisionally arrest the sought-after associates of Terra.
- The current whereabouts of the Terraform Labs CEO are unknown, while South Korean prosecutors confirmed that Kwon had left Singapore last month and flew to a country yet unidentified via Dubai.
See related article: Terra CEO Do Kwon, wanted in South Korea, left Singapore and flew to parts unknown via Dubai