Terraform Labs and crypto bro Do Kwon face $57 million court case in Singapore
But will Kwon show up in court? Probably not.
Terraform Labs and its fugitive CEO, Do Kwan, face a looming court date in Singapore on Wednesday November 2 as the company confronts a $57 million claim from investors.
Also named as defendants in the court case are Terraform Labs' former head of research Nikolaos Alexandros Platias and open source non-profit Luna Foundation Guard.
The claimants represent 359 multinational investors and are led by Spanish citizen and Australian resident Julian Moreno Beltran and Signaporean Douglas Gan. In addition to the $57 million lost in the crash, the investors are also seeking aggravated damages over the collapse in value of the Luna and TerraUSD stablecoins.
Court documents filed on September 23 and obtained by the Wall Street Journal [PDF] list Beltran as having lost around $1.1 million when Luna experienced a $40 billion crash, setting off an industry-wide collapse nicknamed the "crypto winter." As a stablecoin, the TerraUSD and similar Luna tokens were supposedly pegged to the US dollar and therefore uncrashable.
The claimants allege that the defendants breached their duty to investors, intended to injure the claimants, and conspired to make fraudulent misrepresentations. Those misrepresentations included that the tokens were stable by design and maintained by an algorithm that would guarantee their value and could be exchanged at any time for fiat currency.
"The [defendants] held themselves out to be experienced and sophisticated players in the cryptocurrency ecosystem, with the technical and financial expertise to operate a stablecoin project of this magnitude," alleged the claimants.
The document also alleged that the algorithm's "structural weakness" was known by founder Kwon as one of his previous efforts – to create a stablecoin called "Basis Cash" – failed, but the tech was re-used for Luna and TerraUSD.
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- Hong Kong wants to be the world's home for virtual assets
- Infusion of $3.5bn not enough to revive Terra's 'stablecoin'
- South Korea cancels passport of Terraform Lab's Do Kwon
Do Kwon's whereabouts have been unknown since he left Singapore in September a few days after South Korea issued an arrest warrant for the crypto bro. That warrant alleged that Kwon and others violated the nation's capital markets law.
The International Criminal Police Organization, known as Interpol, subsequently added Kwon to its Red Notice list – an international request for local police to detain him, wherever he might be found.
South Korea has cancelled Kwon's passport to make it hard for him to find a bolt-hole.
No one should hold their breath waiting for Kwon to attend court. Once served with civil court process, parties do need to enter an appearance. However, that duty can be offloaded to lawyers.
Meanwhile there is one place Kwon can be easily found: Twitter, which he's admittedly got a habit of using for colorful commentary.
Last week, he spent time on Twitter to retweet pro crypto monologues about how his industry is revolutionizing the world. ®