Amid Terra’s ongoing legal battle with the U.S. SEC and the possible conclusion of Do Kwon’s sentence in Montenegro, a surprising turn of events unfolded.
A consortium of investors, who had initiated a class-action lawsuit against Terraform Labs and its co-founder Do Kwon over allegations of fraud, made an unexpected decision to withdraw their case.
In a legal filing dated September 28th, submitted to the United States District Court for the Northern District of California, the legal representatives of Nick Patterson, the plaintiff who had instigated the lawsuit on behalf of investors, formally requested the dismissal of the lawsuit against Terraform and Kwon. Curiously, the filing omitted any explicit elucidation of the reasons behind this voluntary dismissal without prejudice.
The filing elaborated, “The Defendants from Terraform Labs have not yet responded to the complaint, nor have they submitted motions for summary judgment. Given that the Court has not granted certification for the proposed class in this case, and considering that this dismissal is without prejudice, it shall not carry any legal implications for potential members of the proposed class.”
Patterson’s legal team had initiated the lawsuit in June 2022 in the wake of Terraform Labs’ collapse, an event attributed by many to triggering a significant cryptocurrency market downturn. Since then, Kwon and his company have found themselves under the scrutiny of authorities worldwide for their alleged involvement in a scheme designed to deceive investors.
In February, the U.S. Securities and Exchange Commission launched a civil lawsuit against Kwon and Terra, accusing them of orchestrating a multi-billion-dollar crypto asset securities fraud. In March, Montenegrin authorities apprehended Kwon, subsequently sentencing him to four months in prison due to his use of falsified travel documents. As of the present moment, the question remains unanswered whether Kwon will be released in Montenegro or face extradition to the United States or South Korea.
