A class action lawsuit filed on Friday accuses Do Kwon, Terraform Labs (TFL) and others of selling unregistered securities and making false statements about the stability of the TerraUSD (UST) stablecoin and related token luna to induce investors to purchase them, according to the filing documents.
Other defendants named in the case include Jump Crypto, Jump Trading, Republic Capital, Republic Maximal, Tribe Capital, DeFinance Capital (This appears to be a typo, as there is no company of that name associated with TFL.), DeFinance Technologies (perhaps another typo), GSR Markets, Three Arrows Capital and Nicholas Platias.
Even though the Terra tokens bear all the hallmarks of being investment contracts and, thus, “securities under the Howey test,” the lawsuit says, “no registration statements have been filed with the SEC.”
The lawsuit also claims that members of the Luna Foundation Guard, a nonprofit formed to defend the Terra tokens against severe market volatility, acted on behalf of TFL to promote the stability of UST and misled investors into believing that an available reserve pool would be sufficient to defend against a “proverbial run on the bank by UST/LUNA investors.”
Between May 6 and May 9, however, structural infirmities specific to the Terra ecosystem “exposed the truth regarding the UST/LUNA pair,” and within a week the “prices of UST and LUNA collapsed by about 91% and 99.7%, respectively,” the lawsuit claims.
The suit seeks restitution of the monetary value of the purchase price of the Terra tokens and attorney fees for the plaintiff and all others similarly situated.
The lawsuit was filed in the US District Court, Northern District of California, by Scott + Scott Attorneys at Law.
Messages sent to TFL representatives were not returned by the time of publication.
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Source: https://www.theblock.co/post/152939/do-kwon-terraform-labs-others-hit-with-class-action-lawsuit?utm_source=rss&utm_medium=rss