- Three hundred fifty-nine multinational investors lost $57 million in the Terra-Luna collapse. Files Law Suit in Singapore High Court.
- Filed on September 23, Claims Kwon deceived investors with fraudulent misrepresentation.
- Interpol issues a “Red Notice” to locate and provisionally arrest Terra associates.
What is the case?
In a high-profile case, CEO and co-founder of Terraform Labs Pte. ltd. Kwon Do-Hyung faces a lawsuit of $57 million in Singapore High Court. He is charged with misrepresenting the then-called TerraUSD(TerraClassic USD) as a valuable asset despite knowing its structural weakness.
The legal claim is led by Julian Moreno Beltran, who had $1.1 million worth of TerraUSD, and Singapore native Douglas Gan Yi Dong. Against Kwon, Terraform labs and former head of research Nicholas Platis, and Luna Foundation Guard (LFG), which finds the Terra Ecosystem.
What Exactly Happened?
According to reports, UST relied upon a systematic algorithm involving its other currency Luna (now LunaClassic). In this algorithm, certain tokens were to be removed from circulation to maintain the USD peg and create a UST token. TerraUSD (UST) lost its peg in May due to investors dumping deposits, which resulted in the loss of sister token Luna and caused a $60 billion wipeout. Soon after the incident, South Korean authorities launched an investigation.
Interpol is also involved in the matter owing to the huge amount involved. And has issued a “Red Notice” for Kwon and Terra associates to locate and provisionally arrest them. In a recent interview with crypto journalist Laura Shin, Kwon hinted that he finds this work exciting and would love to work on building things for the market. Even if we believe the 31-year-old entrepreneur is innocent and want to work in this industry, there is a rough road ahead of legal battles.
Case filed in US court
Another case was filed in US court by US law firm Scott+Scott and Bragger Eagle and Squire, in June & July, in a similar case against Kwong and Terra associates on behalf of US investors. The lawsuit claims that the defendant participated in selling unregistered securities, and Terraform labs duped them into buying and artificially inflating costs.
Although it is claimed that Kwon corroborates in the investigation, he supposedly escaped to an unknown location via Dubai last month. And whereabouts of associates are with the Interpol and local authorities.
The Crypto market is relatively new and mostly unregulated. However, certain laws are to be followed in the country of operation and its registration. But considering the TerraUSD case, certain international laws are to be made which shall protect the investors. Also, the investor needs to be cautious and vigilant in investing in the market.
Source: https://www.thecoinrepublic.com/2022/11/09/absconding-terra-ceo-do-kwon-faces-57-million-lawsuit-interpol-issues-red-notice/