On Wednesday, a hearing will take place in Singapore on a case brought against Terraform Labs Pte. Ltd. CEO Kwon Do-hyung on behalf of 359 foreign investors who suffered losses of about US$57 million as a result of Terra-failure, LUNA.
According to court documents obtained by the Wall Street Journal, the lawsuit, which was filed in Singapore’s high court on September 23, asserts that Do Kwon used “fraudulent misrepresentations” to convince investors to buy what was then known as TerraUSD (UST, now TerraClassicUSD), and that Kwon was aware of the “structural weakness” of the algorithmic stablecoin.
On Wednesday, November 2, there will be a follow-up hearing for the lawsuit, according to Singapore’s official judiciary website.
In order to maintain its peg to the US dollar, UST used a methodical process using another Terra cryptocurrency called Luna (LUNA, now Luna Classic), where the production of a UST token needed a specific quantity of LUNA to be removed from circulation.
Douglas Gan Yi Dong, a native of Singapore, and Julian Moreno Beltran are leading the legal action. Beltran, a citizen of Spain, owned TerraUSD worth roughly US$1.1 million. The Luna Foundation Guard (LFG), a fund supporting the Terra ecology, and former Head of Research Nicholas Platias are additional defendants in the action.
A spokeswoman for Terraform Labs refuted the lawsuit’s assertions in a statement, 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
The South Korean government is pursuing Kwon and Terra associates over a number of allegations, including fraud and breaking the country’s capital markets law. Interpol has issued a “red notice” on behalf of the nation, requesting that international law enforcement agencies find and temporarily detain the wanted Terra associates.
The CEO of Terraform Labs’ current whereabouts are unclear, but South Korean investigators have confirmed that Kwon left Singapore last month and traveled to an unnamed location via Dubai.
