The UST stablecoin's price stability was purposely misrepresented, the class action lawsuit claims, by Kwon and his staff. Investors "believed [Terra USD] would be a token that was stable by design [and] whose price would always be pegged to the US Dollar," according to the complaint.
More than 350 irate investors who lost close to $57 million during the UST de-pegging disaster have launched a lawsuit against Do Kwon, the founder of Terraform Labs.
The UST stablecoin's price stability was purposely misrepresented, the class action lawsuit claims, by Kwon and his staff. Investors "believed [Terra USD] would be a token that was stable by design [and] whose price would always be pegged to the US Dollar," according to the complaint.
Unrealistic Promises
Additionally, they believe Do Kwon consciously developed the Anchor Protocol as a high-interest Defi protocol to persuade consumers to buy additional UST. An innovative platform for loans and borrowing, Anchor Protocol started with a 20% interest rate.
But in May 2022, the stablecoin system collapsed and fell into a death spiral, losing nearly all of its market value in a matter of seconds. According to the lawsuit, Do Kwon continued to spread hope following UST's collapse by tweeting that "everything was under control" and advising people to relax.
A spokesperson of Terraform Labs, which is a defendant in the complaint, stated in a statement that the business did nothing wrong and that it would hold itself harmless until proven guilty.
Many claims have been made against Kwon
The once-famous founder of Terraform is today coping with numerous legal processes and threats after the UST collapse. According to reports, South Korean authorities issued a warrant for his arrest in September, and Interpol even put him on its Red list, advising law enforcement to apprehend and imprison him if feasible.
Kwon, though, has been very active on social media. She previously tweeted to let everyone know that she was "making zero attempt to hide." He also implied that he was developing the Luna 2.0 version of the Terra blockchain and that fascinating new developments were forthcoming. Additionally, he appeared on a few specific talk shows and podcasts, where he vehemently denied acting dishonestly or illegally.
The Terra founder received a demand from the South Korean foreign ministry (Kwon is a Korean national) dated October 6 demanding the production of his passport or face having it revoked. He is apparently eluding officials and his current location is unclear.
