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Why 350 investors filed a $57 million lawsuit against Terra co-founder Do Kwon
A lawsuit has been filed against Terra's CEO for falsely representing TerraUSD.The plaintiffs want to be compensated for their losses on investments and additional undefined "aggravated damages." Interpol issued a red notice for Do Kwon less than a month ago.
, and Vatsal Verma
October 30, 2022 . 7:47 AM
Photo by Tingey Injury Law Firm / Unsplash
A lawsuit has been filed against Terra's CEO for falsely representing TerraUSD.
The plaintiffs want to be compensated for their losses on investments and additional undefined "aggravated damages." Interpol issued a red notice for Do Kwon less than a month ago.
Why the lawsuit?
The co-founder and CEO of Terra, Do Kwon, seems to be facing further difficulties down the road. Do Kwon is the subject of many lawsuits, the most recent of which was just made public, in addition to the continuing federal investigation.
The Wall Street Journal reported on Friday that Do Kwon is presently involved in a different case that was initially filed on September 23.
The action, which was brought on behalf of more than 350 investors, accuses Do Kwon of making "fraudulent misrepresentations." These charges have to do with TerraUSD's algorithmic stablecoin, TerraUSD (1). In May, the de-pegging of the stablecoin and subsequent collapse of the Terra ecosystem led to a market-wide catastrophe that cost investors billions of dollars in damages. A second defendant in the complaint is Anchor, which refers to its 20% APY and protocol as a "principal-protected stablecoin savings product."
A spokeswoman for Terraform Labs (2) responded to the charges by saying that 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. The claimants are attempting to collect their investment losses and some undefined "aggravated damages" in addition to their losses.
I am not "on the run" or anything similar - for any government agency that has shown interest to communicate, we are in full cooperation and we don't have anything to hide
— Do Kwon 🌕 (@stablekwon) September 17, 2022
What happened to the co-founder?
Although this complaint was filed last month, others, including class action lawsuits from other law firms like Grant & Eisenhower, have not yet reached their final resolution. Do Kwon has also been a target for the authorities for several months. Prosecutors in South Korea are already looking for him, and Interpol just issued a "red notice" - a global search warrant - in his name. Do Kwon has asserted that he is not hiding and is prepared to cooperate with any government agency, but he has not yet been located.