Class-Action Lawsuit Accuses Terraform Labs of Misleading Investors

Class-Action Lawsuit Accuses Terraform Labs of Misleading Investors – Following the depegging of the Terra stablecoin, a class-action lawsuit was filed against Terraform Labs and a number of other crypto firms for the terrausd collapse (UST). Plaintiff Nick Patterson filed the lawsuit against Terraform Labs (TFL) on behalf of others in a similar situation, as well as the law firm Scott+Scott LLP.

- Advertisement -

Terraform Labs is accused of selling unregistered securities as well as misleading investors, according to documents recently filed in the United States District Court for the Northern District of California.

TFL is joined in the case by Jump Crypto, Jump Trading, Definance Capital, Republic Capital, GSR Markets, Nicholas Platias, Three Arrows Capital, and Do Kwon. The defendants are accused by Patterson and the plaintiffs of “repeatedly extolling the stability of UST.”

Also Read: Sberbank to Conduct First Digital Asset Transaction on Own Platform

Furthermore, the lawsuit asserts that tokens based on Terra are unregistered securities. The plaintiffs’ lawyers argue that “the Terra tokens are securities that the TFL failed to register before selling.” On June 18, 2022, the lawsuit was revealed, and Fatman, a whistleblower, tweeted about the case having been filed in California. Investors were told that UST and Anchor were stable, according to the lawsuit.

- Advertisement -

According to the court filing, Nicholas Platias, the author of the Anchor white paper, said Anchor’s interest rate was “stable” and the decentralized finance (defi) protocol provided a “low-volatility yield” with a “reliable rate of return.” “TFL and the Luna Foundation Guard deceived US investors about the stability of UST and LUNA, as well as the long-term viability of Anchor,” according to the plaintiff’s complaint.

The plaintiffs further cite a March 17, 2021 tweet from the Anchor Protocol’s official Twitter account, which stated:

“Anchor isn’t like any other money market. The protocol offers depositors a stable APY of 20% and only accepts liquid staking derivatives as posted collateral by borrowers.”

The complaint against TFL and the hedge fund firm comes in the wake of a recent lawsuit against Binance US, which was accused of selling unregistered securities and promoting the terrausd (UST) as “safe.”

Another complaint has been launched against Coinbase over the UST fallout, accusing the company of misrepresenting UST as “simply another stablecoin.” Erickson Kramer Osborne and the law firm Milberg Coleman Bryson Phillips Grossman LLP initiated the lawsuit.

Also Read: Elon Musk Hints Twitter Will Integrate Crypto Payments if His Takeover Bid Is Successful

In addition to TFL, Nicholas Platias, Jump Crypto, Do Kwon, Republic Capital, Jump Trading, Definance Capital, and GSR Markets, Su Zhu, co-founder of Three Arrows Capital (3AC), is accused of persuading people to take out bitcoin loans and use the money to invest in Anchor.

The lawsuit against TFL states, “This post was deleted seven days later, right following the UST collapse.” According to rumors, 3AC is having financial difficulties, and members of the crypto community have accused the crypto hedge fund of being insolvent.

- Advertisement -


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More From Evoclique