Do Kwon Facing A $57M Lawsuit In Singapore: WSJ
- Do Kwon is facing another legal threat from a group of close to 350 investors who lost nearly $57 million in the collapse of the TerraUSD cryptocurrency.
- The Interpol has issued a Red Notice against the developer and he is also facing multiple lawsuits in US courts. Kwon is also wanted by South Korean authorities.
- According to the claimants, the crypto entrepreneur made “fraudulent misrepresentations” of the potential of the blockchain and about the stability of the stablecoin UST (now USTC).
Do Kwon, the mastermind behind the collapse of the Terra ecosystem, who claims to be innocent but the Twitter community believes otherwise, has another problem to take care of. According to a report from WSJ, the crypto developer, who remains a fugitive and whose location is unknown, is now facing another legal threat from a group of close to 350 investors who lost nearly $57 million in the collapse of the TerraUSD cryptocurrency, which has been rebranded to TerraClassicUSD (USTC).
Currently, Do Kwon is wanted by South Korean authorities for causing the $40 billion market wipeout in the month of May and taking zero accountability for the same. He is also facing multiple lawsuits against courts in the US and the Interpol has issued a Red Notice against the crypto developer who remains in hiding and has refuted to reveal his location to anyone.
The lawsuit against Do Kwon by over 350 investors was initially filed in Sept. but has gained not much traction. However, it is also one of the biggest legal issues that the founder of the Terra ecosystem will have to face sooner or later. The lawsuit claims that as the leader of the Terra community and the person responsible for billions of dollars at stake, Do Kwon made “fraudulent misrepresentations” of the potential of the blockchain and about the stability of the stablecoin UST (now USTC).
UST stablecoin was supposed to be linked with the $1 value in a one-on-one ratio but failed to do so due to the ecosystem not having the required assets in the treasury and as a result, the ecosystem suffered a so-called “bank run” as billions were wiped off from the crypto sector.
During the collapse of the Terra ecosystem in May, Do Kwon did not show transparency and as a result, investors believed that the things would get better. Also, a major use case of UST, Anchor Protocol that promised yields upto 20% on crypto deposits, failed to keep up with the withdrawals and the extreme selling pressure.
Interestingly, a person from Do Kwon’s crypto firm Terraform Labs commented on the allegations by the 350 investors in the lawsuit stating that the firm will continue to fight vigorously since it had committed no wrongdoing as mentioned in the filing.
“There is a fundamental difference between a public market event and fraud,” the spokesperson said. “The risks were publicly known and discussed, and the underlying code was open-sourced.”
The claimants want their money back, as per the lawsuit and also, they are seeking unspecified “aggravated damages.” One of Singapore’s top law firms, Drew & Napier, are responsible for representing the 350 victims of the Terra ecosystem collapse.