Class-Action Lawsuit Accuses Terraform Labs of Misleading Investors

Following the Terra stablecoin depegging incident, a class action lawsuit has been filed against the company Terraform Labs and many other crypto companies regarding the collapse of Terrausd (UST). The lawsuit against Terraform Labs (TFL) was filed by plaintiff Nick Patterson on behalf of others similarly situated with the law firm Scott+Scott LLP.

Class Action Lawsuit Filed Against TFL and Related Companies – Plaintiffs Allege Terrabase Tokens Were Unregistered Securities

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According to documents recently filed in U.S. District Court in Northern California, TerraForm Labs is accused of selling unregistered securities and defrauding investors. in addition to TFL, the firm is also being sued by Jump Crypto, Jump Trading, Republic Capital Definance Capital, GSR Markets, Three Arrows Capital, Nicholas Platias, and Do Kwon are also named in the suit. Patterson and the plaintiffs accuse the defendants of “repeatedly promoting the stability of UST.”

Do Kwon, co-founder with Terraform Labs, sued in US court for the collapse of the stablecoin TERRAUSD – court filing

– *Walter Bloomberg (@DeItaone) June 18, 2022

Additionally, the lawsuit alleges that the Terra-based tokens are unregistered securities.” The Terra tokens are securities that TFL did not register prior to their sale,” the plaintiffs’ lawyers claim. The lawsuit was revealed on June 18, 2022, with whistleblower Fatmantweetingthat the suit was filed in California. The lawsuit explains that investors were told that UST and Anchor were stable.

Nicholas Platias, author of Anchor’s white paper, is quoted in the court filing as saying that Anchor’s interest rates are “stable” and its diversified finance (Defi) protocol provides a “reliable rate of return” with “low volatility yields.” Plaintiffs’ allegations point out that “TFL and the Luna Foundation Guard misled U.S. investors about the stability of UST and LUNA and the sustainability of the anchors.

Plaintiffs also cite a tweet from Anchor Protocol’s official Twitter account on March 17, 2021, stating:

Anchor is no ordinary money market. The protocol offers a stable 20% APY interest to depositors and only accepts liquid staking derivatives as posted collateral by borrowers.

Co-founder of Three Arrows Capital accused of taking loans secured by bitcoins and telling people to deposit the proceeds with the anchor

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TFL and hedge funds The lawsuit against the group follows a recent lawsuit against Binance US, which is accused of selling unregistered securities and promoting Terrausd (UST) as “safe.” In addition, another lawsuit has been filed against Coinbase, with plaintiffs accusing UST of being “merely a stablecoin.” The lawsuit was initiated by Erickson Kramer Osborne and the law firm Milberg Coleman Bryson Phillips Grossman LLP.

TFL, Nicholas Platias, Do Kwon, Jump Crypto, Jump Trading, Republic Capital, Definance Capital, and GSR Markets, in addition to Three Arrows Capital (3AC). Co-founder Su Zhu is accused of telling people to take out bitcoin loans to spend the proceeds on Anchor.” Seven days later, shortly after the UST collapse, the post was deleted,” the lawsuit against TFL details.3AC is reportedly facing financial difficulties, and members of the crypto community have accused the crypto hedge fund of being insolvent.

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