Do Kwon Faces Another Class Action Suit Over Terra Collapse

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  • Do Kwon faces another class action lawsuit, this time from US investors
  • The suit alleges that Kwon and other entities lied over the reliability of the UST protocol
  • Kwon already faces investigation by Seoul authorities and other class action suits

Terra founder and winner of the 2022 International Humble Pie-eating contest, Do Kwon, has been hit with another class action lawsuit, his 3rd since Terra collapsed last month. Illinois resident Nick Patterson has taken the lead in bringing the suit against Kwon, Terraform Labs and a number of financial backers involved in the Terra debacle, including beleaguered hedge fund Three Arrows Capital. The suit accuses Kwon et al for knowingly selling unlicensed securities and misleading investors.

Lawsuits Piling Up for Do Kwon

The new class action lawsuit treads familiar ground, bringing the entire Terra ecosystem into play, including LUNA, UST and the anchor protocol. The plaintiffs allege that they were sold on the project because of promises made by Kwon that the UST stablecoin could not fail and that the interest-earning Anchor accounts were safe.

Alongside this class action lawsuit, Kwon faces others in a similar vein, an investigation from the Seoul Southern District Prosecutors’ Office to see if the collapse constitutes a criminal enterprise, with Kwon denying as “categorically false” that he personally cashed out $80 million every month from Terra for nearly three years, totalling $2.7 billion.

No Relief for Terra Founder

Not only is Kwon facing investigation over the Terra collapse, earlier this month he lost an appeal against a Securities and Exchange Commission (SEC) ruling in which argued that he did not need to comply with the SEC’s investigation into Mirror Protocol, the DeFi project built on the Terra blockchain that was exploited in May for $2 million following the collapse of LUNA.

Similarly to this new class action lawsuit against Terra, the SEC accused Kwon of selling unlicensed securities.

If Kwon was hoping for a break from his legal headaches then this new suit will have erased that wish. If he was also hoping for better luck on the LUNA front then he won’t be enjoying the charts too much either – LUNA 2.0 entered the market at $18 and has been steadily crashing ever since, currently sitting at $1.99.