Do Kwon and Terraform Labs Face Escalating Troubles: Class Action Advances in Singapore

Friday, 01/12/2023 | 13:45 GMT by Jared Kirui

Terraform Labs is grappling with a major legal battle over the collapse of the UST token.

A class action representing more than 300 parties was filed in September last year.

Do Kwon, ceo of terraform labs — Do Kwon, Former CEO of Terraform Labs

A class action lawsuit against Terraform Labs and its Co-Founders, filed in Singapore, will proceed. This is according to a decision by the High Court to dismiss the defendants' appeal. It marks an important milestone in a case initiated by Julian Moreno Beltran and Douglas Gan on behalf of multiple parties, the Business Times reported.

Following the collapse of UST tokens in May last year, multiple lawsuits have emerged against Terraform Labs and its associated entities. This particular class action lawsuit was filed in September 2022, representing 377 parties.

Allegations of Fraud and Extradition Requests

The dismissal of the appeal by the defendants on November 30, 2023, signified an important step in the progress of the lawsuit. The case involves allegations of fraud against Terraform Labs, Do Kwon, Nikolaos Alexandros Platias, and Luna Foundation Guard.

The plaintiffs contend that misrepresented information led them to purchase and hold UST tokens despite their drastic devaluation. Recently, a court in Montenegro dismissed Terraform's attempts at arbitration, paving the way for Kwon's extradition.

The collapse of UST, which was originally pegged to the US dollar at a ratio of 1:1, triggered claims of nearly US$57 million for losses incurred by the affected individuals. This was followed by a filing of claims by investors seeking substantive remedies. Kwon faces significant legal challenges and could be extradited to the US or South Korea.

Do Kwon's Arrest and Legal Challenges

Kwon and Han Chong-Joon, Terraform's Former CFO, were arrested while attempting to travel to Dubai. The duo was sentenced to a four-month jail term in Montenegro for possession of forged passports and falsified documents. A bail of €400,000 was granted, although Kwon denied the alleged forgery.

Confiscation of fake passports and identity cards from the executives led to their conviction. Earlier, the bail granted was suspended due to incomplete property assessment. The charges against Kwon included commodities fraud, securities fraud, wire fraud, and conspiracy.

Kwon asserted that he obtained travel documents through a Singapore-recommended agency, unaware of the alleged forgery. This argument contrasted with the court's decision. The collapse of Terra's digital assets in May last year triggered legal ramifications, with fraud charges from US federal prosecutors compounding Kwon's legal predicament.