The liquidators of bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC) have filed a lawsuit against Terraform Labs, seeking $1.3 billion in damages following the fund's collapse in 2022, Bloomberg reported on Monday. losses suffered. In June 2023, liquidators also sought $1.3 billion from 3AC founders Su Zhu and Kyle Davies.
The origins of this case can be traced back to May 2022, when the Terra network’s algorithmic stablecoin terraUSD (UST) and its associated token LUNA suffered a $40 billion collapse despite the guarantee of co-founder Do Kwon. By July, 3AC filed for bankruptcy amid huge losses, saying Terra's collapse had caused irreparable damage.
According to Bloomberg, the liquidator said in court documents that the case alleges that Terraform manipulated the market for Luna and TerraUSD and induced 3AC to purchase these tokens "in a manner that artificially inflated the price of the assets." Completely erased.
Terraform filed for bankruptcy in January 2024 in the US state of Delaware. In April 2024, Do Kwon was charged with civil fraud by the U.S. Securities and Exchange Commission (SEC) and found guilty by a Manhattan jury. Do Kwon remains stranded in Montenegro, where he has been imprisoned since March 2023, when he was arrested there for using a false passport. He is currently awaiting a final decision from Montenegro authorities on the location of his extradition, which has been requested by South Korean and US authorities.
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