Do Kwon and Terraform Labs Slapped With Class-Action Suit

Do Kwon, the “heartbroken” co-creator of Terra, headlines a raft of defendants named in a class-action suit filed Friday in U.S. District Court in Northern California.

Kwon is joined by a group that includes Terraform Labs, Jump Crypto, and Three Arrows Capital. Plaintiff Nick Patterson is alleging, among other accusations, that Terra tokens were sold as “unregistered securities,” and that the “Defendants made aseries of false and misleading statements regarding the largest Terra ecosystem digital assets by market cap, UST and LUNA, in order to induce investors into purchasing these digital assets at inflated rates.”

Kwon and Daniel Shin launched Terraform Labs in 2018, initially with the goal of upending payment giants like PayPal. Later that year, the pair raised $32 million, and in 2019 an initial coin offering yielded $62 million.

UST and LUNA imploded last month, erasing tens of billions of dollars in value, for which Kwon was pilloried online. After promising Terra’s dollar-pegged algorithmic stablecoin couldn’t possibly collapse, while also attacking rivals on Twitter, sympathy was scarce.

But that still didn’t stop the Terra community from approving “Terra 2.0” in the wake of the stunning collapse, a project that included creating a new LUNA token and relegating the previous one to “LUNA Classic” status, to instead trade under LUNC.

As of this writing, the new LUNA was trading for $1.81—down from an early peak of $19.54, according to CoinMarketCap—while LUNC was hovering around $.00005.