Three Arrows Capital claims Terraform Labs' assets collapse led to a $1.3B loss, causing their 2022 downfall.
3AC alleges Terraform Labs inflated asset values, worsening their $462M LUNA investment loss.
Terraform Labs faces mounting legal troubles, including a $1.3B claim and Do Kwon’s pending extradition.
Terraform Labs' legal problems are becoming worse. The now-defunct large hedge fund Three Arrows Capital has filed a claim of $1.3 billion against the firm. 3AC argues that Terraform Labs was part of what killed it in 2022, basing such on its losses after LUNA and TerraUSD, two assets very closely associated with Terraform Labs, went bust.
https://twitter.com/crypto/status/1823066346566873427 3AC's Allegations Against Terraform Labs
Reportedly, early in 2022, 3AC had funded LUNA to the tune of $190 million in an investment of $1 billion by aggregate along with other investors. The massive sell-off, followed by the subsequent crash in the price of TerraUSD, triggered the events toward the depreciation of LUNA.
According to 3AC, by mid-May of this year, the value of the LUNA holdings had fallen to about $2,700, from $462 million. Liquidators stated in a complaint that Terraform Labs, of which Do Kwon is the founder, had falsified the appraisal procedure used to falsely inflate the value.
3AC claims that all of its investors suffered enormous losses as a result of LUNA and TerraUSD collapsing. Furthermore, these losses contributed to the hedge fund's collapse in 2022. As a result, liquidators were appointed by a British Virgin Islands court to supervise 3AC's creditors' payments.
Ongoing Legal Battles and Future Implications
Bankrupt companies have been doing this for ages to try to retrieve their money. For instance, Celsius Network sued Tether and accused Tether of involving itself in illegal transactions of Bitcoin worth over 3.5 billion dollars. In reply to these accusations, heavy though they were, Tether CEO Paolo Ardoino said that Celsius had sought permission to use the same controversial Bitcoin.
Meantime, the head of Terraform Labs, Do Kwon, is pending extradition to South Korea. Indeed, in these very days, the country's Supreme Court has postponed his extradition upon the request of the State Prosecutor's Office applying for the protection of legality. Therefore, Terraform Labs' situation will become much more complicated as a result of the conclusion of this legal strategy.
Terraform Labs now faces other obstacles in addition to the $1.3 billion claim from 3AC. The case also highlights the wider effects on the cryptocurrency market of the TerraUSD and LUNA collapses.
The post Three Arrows Capital Files Lawsuit Worth $1.3 Billion Against Terraform Labs Over LUNA Collapse That Led to its Downfall appeared first on Crypto News Land.
