Terraform Labs has been sued by the liquidators of the crypto hedge fund Three Arrows Capital (3AC) who are seeking 1.3 billion dollars. Essentially, the company is accused of manipulating the market for Luna and TerraUSD tokens.
Terraform in causa: i liquidatori del crypto hedge fund 3AC ora chiedono $1,3 miliardi
Change of scene in the Terraform Labs case, where now the liquidators of the crypto hedge fund Three Arrows Capital (3AC) are suing it seeking at least 1.3 billion dollars in compensation.
Liquidators for failed cryptocurrency hedge fund Three Arrows Capital are seeking at least $1.3 billion from bankrupt TerraForm Labs for losses the fund suffered following the 2022 crash of TerraUSD and Luna tokens https://t.co/4io1Fhnp9A
— Bloomberg Crypto (@crypto) August 12, 2024
“The liquidators of the failed cryptocurrency hedge fund Three Arrows Capital are demanding at least 1.3 billion dollars from the failed TerraForm Labs for the losses suffered by the fund following the 2022 collapse of the TerraUSD and Luna tokens.”
In practice, the same liquidators had asked for the same amount from the founders of 3AC, Su Zhu and Kyle Davies, in June 2023. Now, the situation has changed as it is claimed that the real culprit for the losses due to fraud is indeed Terraform Labs.
In fact, the ongoing lawsuit claims that TerraForm induced 3AC to purchase Luna and TerraUSD, manipulating the market for these tokens “in order to artificially inflate the price of the assets” before they were wiped out.
Such accusations refer to the collapse of the Terra network that began in May 2022, with its algorithmic stablecoin TerraUSD (UST) and its other token LUNA, dropping by 40 billion dollars.
In July, 3AC had filed for bankruptcy stating that the collapse of Terra had caused it irrecoverable losses.
Terraform guilty of manipulating the crypto market: 3AC liquidators sue it
According to the current accusations of the liquidators of 3AC, the real culprit of their loss is precisely Terraform Labs for inducing 3AC to purchase Luna and TerraUSD.
To succeed in this endeavor, Terraform Labs would have manipulated the market of these two tokens.
At the moment, Terraform Labs is bankrupt, proceeding in these months with the final phase of its closure.
At stake is an agreement with the United States Securities and Exchange Commission that requires it to pay 4.5 billion dollars. To succeed in this endeavor, Terraform is trying to sell four of its assets.
The proceeds will be allocated to a liquidation process of the operations, aimed at maximizing the value for creditors and stakeholders.
The four activities of Terraform Labs put up for sale are exactly Pulsar Finance, Station, Enterprise, and Warp.
The journey of Do Know until his conviction
The co-founder of Terraform Labs, Do Know, was arrested in March 2023 in Montenegro, for using falsified travel documents, along with his colleague.
From that moment, given the ongoing lawsuit in the USA, his extradition to the United States has been requested up to three times but the court of Montenegro has always refused.
Only in this March 2024, Do Know was released from prison in Montenegro and handed over to the foreign police.
Finally, in April 2024, the New York jury managed to convict Terraform Labs and Do Kwon for fraud, in the case against the SEC. The verdict speaks of deceiving investors through UST and LUNA.