According to the lawsuit, “Defendants falsely promoted UST, Luna, and other related Terra coins via social media and other web-based and mail channels. In particular, defendants touted the stability of the coins and guaranteed 20% annual returns on coins deposited in Terraform Labs’ high-yield savings application on the Terra blockchain.”
The CEO of TerraForm Labs, Do Kwon, is being hit with a new set of accusations for his alleged participation in the downfall of the Terra ecosystem, which happened earlier this year. He is accused of promoting LUNA, UST and Terra-based lending platforms, despite knowing that the project was not sustainable.
Michael Albright, a Florida resident, made a complaint in the US District court on behalf of others who are suffering financial loss because they bought into LUNA and UST.
The lawsuits are also targeting other entities such as the blockchain firm TerraForm Labs, and Nicholas Platias, the company’s former head of research.
They stated;
“Defendants falsely promoted UST, Luna, and other related Terra coins via social media and other web-based and mail channels. In particular, defendants touted the stability of the coins and guaranteed 20% annual returns on coins deposited in Terraform Labs’ high-yield savings application on the Terra blockchain—the Anchor Protocol (“Anchor”).”
The complainant said that LUNA was run like a Ponzi scheme, which led to its ultimate crash when there was a decline in demand for the UST stablecoin.
He said;
“UST amounted to a Ponzi scheme that was only sustained by the demand for UST created by Anchor’s excessive yields. As long as demand for UST remained high, Terra’s UST/Luna exchange mechanism would keep the supply of Luna relatively low and sustain a Luna price that could support UST’s peg.”
The crash of Terra’s token is reported to be the biggest crash in the history of crypto. The collapse is taking a toll on its users, who invested a fortune. It is so bad that Redditors are sharing suicide hotlines due to the incredible losses of some of its users. In the weeks that followed, about $300 billion was lost.
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