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Terra Co-Founder Do Kwon Faces $57 Million Lawsuit in Singapore

Do Kwon, co-founder of Terraform Labs, is being sued in Singapore for $57 million. Investors allege he misled them about the stability of TerraUSD (UST), now known as TerraUSD Classic (TUSD), despite knowing its structural fragility. The lawsuit, filed in September, seeks an injunction, disgorgement of profits, and restitution. A court hearing is set for November 2. Kwon, who also faces international legal issues, including a revoked passport and an Interpol Red Notice, maintains his innocence and optimism about the case's outcome.
Published on 2022-10-31

Terra Co-Founder Do Kwon Faces $57 Million Lawsuit in Singapore

Do Kwon, the co-founder of Terraform Labs, is currently embroiled in a significant legal battle in Singapore. A group of investors has filed a lawsuit against him, alleging that he misled them about the financial health of the Terra ecosystem. The lawsuit, which seeks $57 million in damages, claims that Kwon was aware of the inherent instability of algorithmic stablecoins but failed to disclose this information to investors.

Key Allegations in the Lawsuit

The lawsuit specifically targets TerraUSD (UST), which was rebranded as TerraUSD Classic (TUSD) following regulatory scrutiny. Investors argue that Kwon knowingly misrepresented the stability of UST, leading to significant financial losses when the stablecoin collapsed. The court document alleges that Kwon and his team made fraudulent representations, either knowingly or recklessly, about the product's viability.

Upcoming Court Hearing

A follow-up hearing for the case is scheduled for November 2, according to Singapore’s judiciary website. The court has accused Kwon of making false and misleading statements, which forms the basis of the fraud allegations. If the court rules in favor of the plaintiffs, Kwon could be required to pay substantial damages.

Do Kwon's Defense

Kwon and his legal team have denied all allegations, expressing confidence in their defense. Despite the ongoing legal challenges, Kwon remains optimistic about the future of his projects and believes he will emerge victorious in the lawsuit.

Broader Legal Challenges

This lawsuit is not the only legal issue Kwon is facing. In September, South Korea revoked his passport, and Interpol has issued a Red Notice for his arrest. These developments highlight the growing international scrutiny of Kwon’s activities and the potential consequences of the ongoing legal battles.

What the Lawsuit Seeks

The plaintiffs are seeking several remedies, including an injunction to prevent further distribution of TerraUSD, disgorgement of profits, and restitution for investors. These measures aim to hold Kwon accountable and provide some relief to those affected by the collapse of the Terra ecosystem.

The outcome of this case could have significant implications for the cryptocurrency industry, particularly for algorithmic stablecoins and the transparency expectations for project founders. As the legal proceedings unfold, investors and industry watchers will be closely monitoring the developments in this high-stakes case.

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