Do Kwon, the founder of Terraform Labs & creator of the algorithmic stablecoin UST, is now the target of a lawsuit in Singapore which was filed by more than 350 aggrieved investors who lost nearly $57 Million in the UST de-pegging event.
The class action lawsuit alleges that Kwon & his subordinates intentionally misrepresented the price stability of its UST stablecoin.Investors “believed that [Terra USD] would be a token that was stable by design [and] whose price would always be pegged to the US Dollar,” the lawsuit states.
Unrealistic Promises
Furthermore, they believe Do Kwon intentionally built the Anchor Protocol, a high-interest rate Defi protocol to lure customers into buying more UST.Anchor Protocol was essentially a lending & borrowing platform which started with a 20% interest rate — an industry first.
However, in May of 2022, the stablecoin mechanism failed and went into a death spiral; losing virtually all of its market value in minutes.The lawsuit claims that, despite the failure of UST, Do Kwon kept on raising hopes by tweeting for people to calm down and saying “everything was under control”.
A Terraform Labs spokesperson, who is also a defendant in the lawsuit, said in a statement that it committed no wrongdoing and would defend itself until proven not guilty.
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Multiple Charges Against Kwon
The once famous Terraform founder is now facing numerous legal prosecutions and threats since the UST collapse.In September, it was reported that South Korean authorities had issued an arrest warrant against him, and even Interpol added him to its Red list, thus requesting law enforcement to locate and detain him if possible.
Kwon, on the other hand has been quite active on social media & once tweeted “making zero effort to hide” to let everyone know.
He also gave the impression of working on the newer Terra blockchain, termed Luna 2.0 & that, new exciting developments were coming in.He also made appearances on a few selected talk shows and podcasts where he vehemently denied resorting to any sort of fraudulent activities or wrongdoings.
The Terra founder was given an order by South Korea’s foreign ministry (Kwon is a Korean national) on October 6 to turn up his passport or risk having it revoked.
Currently, his whereabouts are unknown and he is allegedly running and not complying with the authorities.
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