Crash

2024

United

Terra

Seeking $1.3 billion in damages for their losses suffered following the catastrophic collapse of the Terra network in 2022, the liquidators of collapsed cryptocurrency hedge fund Three Arrow Capital (3AC) have sued Terraform Labs. This <a href="https://www.bloomberg.com/news/articles/2024-08-12/three-arrows-liquidators-seek-1-3-billion-over-2022-luna-crash?sref=3REHEaVI" rel="noopener noreferrer nofollow">legal action</a> adds even another chapter to the continuous aftermath from one of the most important collapses in the history of the digital currency market.
<h2 id="span-style-font-weight-400-3ac-falls-span">3AC Falls</h2>
The issue started in May 2022 when Terra’s algorithmic stablecoin, terraUSD (UST), and companion token, LUNA, had a <a href="https://thecoinrise.com/luna-crash-devastates-investors-drops-below-1/" rel="noopener noreferrer nofollow">catastrophic fall wiping off $40 billion in market value</a>. Citing irreversible losses linked to its investments in Terra’s tokens, this slump was a major contributing cause to 3AC’s ultimate bankruptcy—which sought Chapter 15 protection in July 2022. Although Terra’s co-founder, Do Kwon, gave guarantees, the fall of the network rocked the crypto industry and brought down many companies like 3AC.
<h3 id="span-style-font-weight-400-charges-of-market-control-span">Charges of Market Control</h3>
In the case, 3AC’s liquidators claim that Terraform Labs artificially raised the values of LUNA and UST, therefore inducing the hedge fund to buy large volumes of these assets. The liquidators assert that this manipulation misled 3AC, resulting in significant losses when the tokens finally dropped in value. Filed in court records as reported by Bloomberg, the lawsuit shows a notable increase in the legal disputes over the Terra fall-through.
3AC’s liquidators have not been slow in trying to recover large amounts connected to the Terra collapse. Seeking to hold <a href="https://thecoinrise.com/3ac-founders-accused-of-irresponsibility-for-shifting-blame-to-ftx/" rel="noopener noreferrer nofollow">Su Zhu and Kyle Davies, the founders of 3AC</a> responsible for the fund’s losses, they filed a $1.3 billion claim against them in June 2023.
<h2 id="span-style-font-weight-400-legal-troubles-for-terraform-span">Legal Troubles for Terraform&nbsp;</h2>
The company behind the Terra network, Terraform Labs, has been involved in court battles since the fall. Once one of the most exciting initiatives in the crypto world, the company filed for bankruptcy in Delaware in January 2024, a remarkable decline from grace.
Additionally dealing with major legal consequences is co-founder of Terraform, Kwon. A Manhattan jury decided in April 2024 Kwon guilty of civil fraud allegations issued by the U.S. Securities and Exchange Commission (SEC). The charges focused on Kwon’s involvement in the Terra network’s operations and promotion prior to its fall-through.
Kwon has been in Montenegro since March 2023; he was arrested for trying to use fictitious travel documentation. He is still in prison while <a href="https://thecoinrise.com/montenegrin-court-confirms-extradition-of-do-kwon-to-south-korea/" rel="noopener noreferrer nofollow">Montenegrin officials decide on his extradition at last</a>. His legal situation has been further complicated by both the United States’ and South Korea’s requests for his extradition.
The post <a href="https://thecoinrise.com/3ac-liquidators-sue-terraform-labs-for-1-3b-over-2022-crash-losses/" rel="noopener noreferrer nofollow">3AC Liquidators Sue Terraform Labs for $1.3B Over 2022 Crash Losses</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">TheCoinrise.com</a>.

3AC Liquidators Sue Terraform Labs for $1.3B Over 2022 Crash Losses

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