The Terraform Labs founder, Do Kwon, has recently been the target of several lawsuits. There is an ongoing class-action proceeding in the US in which Kwon failed to appear in court. However, he and founding member, Nicholas Platias, are now facing another $57 million lawsuit.
A crypto content, social media account, Whale Coin Talk, tweeted about the development.
The lawsuit was filed by 359 investors in Singapore who lost money following TerraUSD's demise. The $57 million they seek will serve as compensation. Although the lawsuit was filed on September 23, the case is now receiving much media attention.
The lawsuit claims, among other things, that Do Kwon made "fraudulent misrepresentations" about the stability of the TerraUSD.
As an algorithmic stablecoin, TerraUSD employs financial engineering to maintain a one-to-one peg on the US Dollar. The mechanism, nevertheless, collapsed in May, devaluing TerraUSD and Terra LUNA, its sister currency, by nearly $40 billion.
However, a representative for Terraform Labs has indicated that the Singapore-based firm will defend itself, given that it has not done any wrong.,
The representative said that a public market event is fundamentally different from fraud. According to him, the risks were publicly known and discussed, and the underlying code was open-sourced.
Kwon also refutes accusations of fraud as he had faith in TerraUSD and suffered financial loss following its collapse.
