Do Kwon, the co-founder of Terraform Labs who may be facing legal actions in South Korea and the United States, is the target of a lawsuit in Singapore along with the Luna Foundation Guard (LFG) and Terra founding member Nicholas Platias.
In a lawsuit filed in Singapore’s high court on Sept. 23, 359 individuals allege Kwon, Platias, the LFG and Terra made fraudulent claims, including that Terra’s stablecoin, TerraUSD (UST) — now TerraUSD Classic (USTC) — was not “stable by design” and unable to maintain its U.S. dollar peg.
The claimants are seeking compensation for roughly $57 million worth of “loss and damage” combined based on the value of UST tokens they purchased and held or sold amid the market downturn in May. They also request an order to pay for “aggravated damages.”
According to the individuals filing the lawsuit, the four parties tied to Terra “knew or ought to have known that the Claimants wished to buy and hold cryptocurrency stablecoins that were not subject to the volatility of the wider market and earn a decent passive return.” The court document specifically alleges that Kwon had been aware of “the structural weakness of algorithmic stablecoins” based in part on his role in the fall of Basis Cash.
“The Defendants made the said representations fraudulently either well knowing that they were false and untrue, or recklessly not caring whether they were true or false,” says the lawsuit.
In a statement to Cointelegraph, a Terraform Labs spokesperson said both the company and LFG "intend to vigorously defend themselves" against the claims:
"There is a fundamental difference between a public market event and fraud. Terraform Labs and the Luna Foundation Guard committed no wrongdoing — the risks were publicly known and discussed, and the underlying code was open-sourced."
Kwon has been the target of numerous legal actions and threats since the collapse of the Terra blockchain ecosystem in May. South Korean authorities issued an arrest warrant for the Terra co-founder in September, which was subsequently dismissed, and Interpol added Kwon to its Red Notice list, requesting law enforcement locate and potentially detain him.
Kwon has been active on social media during the controversy and said in September he was “making zero effort to hide” despite not revealing his location. One Redditor said Kwon was “doing a terrible job at acting innocent for a guy who is innocent” in response to the lawsuit. Others wildly speculated that he had gotten plastic surgery to disguise his appearance.
Idk, its pretty good whiskey— Do Kwon (@stablekwon) October 24, 2022
The Sept. 23 lawsuit placed Kwon’s address in Singapore, but some reports have suggested that he may have fled the country. On Oct. 6, South Korea’s foreign ministry (Kwon is a Korean national) ordered the Terra co-founder to surrender his passport or it would be canceled.