Following the Terra stablecoin depegging incident, a class action lawsuit was filed against company Terraform Labs and a number of other crypto companies over the collapse of Terrausd (UST). The lawsuit against Terraform Labs (TFL) was filed by plaintiff Nick Patterson on behalf of other similar parties and the law firm of Scott+Scott LLP.
A class action lawsuit has been filed against TFL and its affiliates – plaintiffs claim Terra-based tokens are unregistered securities
According to documents recently filed with the US District Court in Northern California, Terraform Labs is accused of selling unregistered securities and deceiving investors. In addition to TFL, the lawsuit also names Jump Crypto, Jump Trading, Republic Capital, Definance Capital, GSR Markets, Three Arrows Capital, Nicholas Platias and Do Kwon. Patterson and the class of plaintiffs accuse the defendants of “repeatedly touting the stability of UST.”
TERRAFORM LABS AND CO-FOUNDER DO KWON SUED IN US COURT OVER COLLAPSE OF STABLECOIN TERRAUSD – JUDICIAL AID
— *Walter Bloomberg (@DeItaone) June 18, 2022
Additionally, the lawsuit alleges that Terra-based tokens were unregistered securities. “The Terra tokens are securities that TFL did not register prior to the sale,” the plaintiff’s attorneys insist. The lawsuit was uncovered on June 18, 2022 and whistleblower Fatman tweeted about the case being filed in California. The lawsuit explains that investors have been told that UST and Anchor are stable.
Nicholas Platias, author of Anchor’s whitepaper, is quoted in the court filings as saying that Anchor’s interest rate is “stable” and its decentralized finance (defi) protocol offers a “low-volatility return” with a “reliable rate of return.” “TFL and the Luna Foundation Guard have misled US investors as to the stability of UST and LUNA and the sustainability of Anchor,” plaintiffs argue.
Plaintiffs also cite a March 17, 2021 tweet from the official Anchor Protocol Twitter account, which said:
Anker is no ordinary money market. The protocol offers depositors stable interest rates of 20% APY and only accepts liquid staking derivatives as pledged collateral from borrowers.
The Three Arrows Capital co-founder has been accused of telling people to borrow against Bitcoin and deposit proceeds into Anchor
The lawsuit against TFL and the group of hedge funds follows the recent lawsuit against Binance US accused of selling unregistered securities and promoting Terrausd (UST) as “safe.” Additionally, another lawsuit has been filed against Coinbase over the UST fallout, as plaintiffs accuse Coinbase of issuing UST as “just another stablecoin.” The lawsuit was initiated by Erickson Kramer Osborne and the law firm of Milberg Coleman Bryson Phillips Grossman LLP.
Alongside TFL, Nicholas Platias, Do Kwon, Jump Crypto, Jump Trading, Republic Capital, Definance Capital and GSR Markets, Three Arrows Capital (3AC) co-founder Su Zhu is accused of telling people to take out loans for their Record Bitcoin to use the proceeds for Anchor. “Seven days later, immediately after the collapse of the UST, this post was deleted,” the lawsuit against TFL details. 3AC is reportedly facing financial hardships and members of the crypto community have accused the crypto hedge fund of defaulting.
Tags in this story 3AC and GSR Markets, Binance, California, Class Action, Class Action, Coinbase, Definance Capital, Depegging, do kwon, Jump Crypto, Jump Trading, LUNA, Nicholas Platias, Republic Capital., Terra, Terraform Labs, TerraUSD, TFL , Three Arrows Capita, UST, UST depeg, Whistleblower Fatman
What do you think of the class action lawsuit against TFL? Let us know what you think about this topic in the comment section below.
Jamie Redman
photo credit: Shutterstock, Pixabay, WikiCommons
Disclaimer: This article is for informational purposes only. It is not a direct offer, or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.