The class action lawsuit was one of many filed against the company last year following the Terra-LUNA fiasco, which wiped out billions of dollars as investors watched their money disappear in a matter of days.
Singapore’s Federal Court on November 30 rejected an appeal to dismiss a class action lawsuit brought against Terraform Labs, formerly the brains behind the Terra blockchain, and its disgraced co-founder Do Kwon.
According to a Business Insider report, the two filed an appeal to the Superior Court to dismiss the lawsuit, but the court ruled in favor of the defendants and the class action lawsuit is currently ongoing.
Class action lawsuit to move forward
At a court hearing Thursday, lawyers representing the company and its former CEO, who recently received extradition permission from Montenegro, sought to convert the class action lawsuit into an arbitration proceeding.
Citing the company’s terms of service, lawyers argued that users waived their right to a trial and their right to participate in a class action lawsuit. However, the court rejected this claim and ruled to continue the lawsuit.
The so-called class action lawsuit was one of many filed against the company last year following the Terra-LUNA fiasco, which wiped out billions of dollars as investors watched their money disappear in a matter of days.
375 investors, some of whom lost funds due to the Terra-LUNA incident, gathered together and filed a lawsuit in September 2022. Spanish national Julian Moreno Beltran and Singaporean Douglas Gan took the lead in filing the lawsuit on behalf of the others. It suffered a loss of $57 million.
TerraUST’s false promotion
The plaintiffs alleged in the lawsuit that Terraform Labs, Do Kwon and other executives made fraudulent misrepresentations in promoting the company’s algorithmic stablecoin, terraUSD (UST). According to court documents, the false misrepresentations tricked investors into purchasing and staking the token TerraUSD and its sister token LUNA, which ultimately led to the UST being traded after lifting its 1:1 peg to the U.S. dollar in May 2022. So we have it. For $0.10.
With the appeal dismissed, the case now continues despite the defendants’ efforts to stop it.
Last October, Terraform Labs reportedly filed to dismiss criminal charges filed against the company by the U.S. Securities and Exchange Commission (SEC) for violating federal law and selling unregistered securities domestically.
The company said the charges should be dismissed because financial watchdogs were unable to make their case. However, the company later refuted the report, pointing out that it had not filed any such application.
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