Do Kwon, Terraform Labs Face Class-Action Lawsuit for Allegedly Selling Unregistered Securities

While most of the crypto economy’s digital assets have seen significant gains this month, Terra’s luna 2.0 has been stagnant as it has shed 24.37% against bitcoin during the last 30 days. LUNA is down 89.8% from the token’s all-time price high two months ago on May 28. Moreover, the whistleblower Fatman has revealed that victims of the Terra collapse have filed a class-action lawsuit against Terraform Labs, Do Kwon, and Nicholas Platias.

On July 26, the whistleblower Fatman (@Fatmanterra on Twitter) shared a sign-up link for investors who were hurt financially by the Terra collapse in mid-May. The case is being handled by the litigation firm Scott+Scott and the defendants include Terraform Labs (TFL), Nicholas Platias, and Do Kwon. Furthermore, Jump Crypto, Jump Trading, Republic Capital, Republic Maximal LLC, Tribe Capital, Definance Capital, GSR Markets Limited, Three Arrows Capital (3AC), and the Luna Foundation Guard (LFG) are included.

In Fatman’s Twitter thread that discusses the lawsuit, the whistleblower complimented Do Kwon’s intellect but noted that the Terra co-founder did not use it for good. “Instead of using his genius for good, Do used it to create a scheme so convincing, ingeniously mixing in real utility with sheer lies, that it not only led to the downfall of thousands of investors but also some big funds who had been hoodwinked in spite of solid research,” Fatman remarked in the thread. Fatman added:

We will be joining the class action lawsuit filed in the U.S. by the international law firm Scott+Scott. We are also preparing actions in another jurisdiction. We demand a fair trial to uncover all of TFL [and] Do Kwon’s wrongdoings and so that justice can take its course.

While the class-action lawsuit participants prep for the case against TFL, the project’s luna 2.0 token called LUNA has not been performing as well as most of the crypto economy. LUNA has lost 24.37% against bitcoin (BTC) since last month and 9.62% against the U.S. dollar in the same time frame. Out of 13,099 crypto coins in existence, LUNA is ranked 148 with its $261.63 million market valuation. Since LUNA’s all-time high on May 28 when it reached $18.87 per unit, LUNA has lost 89.8% in USD value.

LUNA has significant exposure to tether (USDT) pairs as cryptocompare.com statistics indicate that USDT represents 77% of all LUNA’s trades during the last 24 hours. USDT is followed by USDC (11.43%), TRY (9.57%), USD (0.68%), and EUR (0.37%). Additionally, LUNA’s total value locked (TVL) in the world of decentralized finance (defi) is $26.88 million while just over $12 million is still held in defi protocols on the Terra Classic chain. In addition to the Scott+Scott lawsuit, Terra’s co-founder Daniel Shin is banned from leaving South Korea.

South Korean law enforcement officials are investigating TFL, Shin, and Kwon and Fatman say a rough translation of the article details that “the prosecutor also brought up the possibility of cooperating with Interpol to issue a Red Notice for Do Kwon’s extradition.” The class-action complaint published by Scott+Scott claims all of the Terra tokens TFL has issued are unregistered securities and TFL never registered with the Securities and Exchange Commission (SEC). In Fatman’s Twitter thread, the whistleblower stressed that it was hard to convey how badly some Terra investors were affected by the collapse. Fatman’s Twitter thread concluded by noting:

It’s time to take matters into our own hands. I’m sick of seeing our space invaded by scammers who think they can brazenly rob thousands of innocents and get away with it. People like Do Kwon make this industry rotten. It’s time for a purge so crypto can be reborn anew.

What do you think about the class-action lawsuit against the Terra team members? What do you think about the lackluster market performance LUNA 2.0 has seen during the last month? Let us know what you think about this subject in the comments section below.