- The last Class Action lawsuit against Terraform Labs and Do Kwon has been dismissed.
- With no more Class Actions, the embattled firm now has only regional regulators to answer to.
A September 28 filing shows that the litigation brought against Terraform Labs and its co-founder Do Kwon by bereaved UST holders, led by Nick Patterson, has been voluntarily dismissed in the United States District Court for the Northern District of California. Terra confirmed the news of the dismissal on the X app, citing that the latest development is another win for Terraform Labs.
1/ In another win for Terraform Labs, the class-action lawsuit alleging fraud against TFL and @stablekwon has been voluntarily dismissed in the U.S. District Court for the Northern District of California.https://t.co/oYfkblOf0H
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) September 30, 2023
These investors had accused the crypto firm and its then-Chief Executive Officer (CEO) Kwon of racketeering, misleading investors, and violating securities laws by selling unregistered securities, including a stablecoin whose collapse left the entire crypto industry in shambles. In his separate filing, Patterson explained that he bought the dollar-pegged stablecoin UST but lost all his money when it collapsed in 2022.
Terraform Labs argued that the charges against it “apply domestically, not extraterritorially.” Precisely, the Terraform defense team explained that Patterson did not buy the token directly from the company or the former CEO, nor did Do Kwon or any of the protocol’s founders coerce him into buying the stablecoin. Patterson was further asked to prove that these entities earned any fee or commission from the sales of the UST that he purchased.
The dismissal means there are now no other class action lawsuits against Terraform Labs in the U.S. This is because the Albright class action case against the firm was equally dismissed voluntarily earlier this year in the U.S. District Court for the Southern District of New York. Markedly, the Albright case had similar claims as the litigation led by Patterson.
Chris Amani, the new CEO of Terraform Labs expressed his relief at the turn of events for the company. Amani said.
The most recent class action lawsuit filed against Terra in the U.S. has been dismissed by the plaintiffs, making it a total of two. As long as these groundless legal allegations persist, we will remain committed to our defense.
SEC Pursues Litigation Against Do Kwon And Terraform Labs
Noteworthy, the subject of a violation of securities laws has contributed to the U.S. Securities and Exchange Commission’s (SEC) pursuance of Do Kwon.
In February, the SEC charged Do Kwon with violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act. The SEC Chair Gary Gensler claimed that Kwon constantly put out false and misleading statements which deceived investors into making uncalculated decisions that led to the loss of their funds.
A press release by the regulator detailed how between April 2018 to May 2022, Terraform Labs and Do Kwon were offering crypto asset securities, many of which were in unregistered transactions. As a result of these sales, Kwon was said to have raised billions of dollars from investors.
Apart from the United States, Do Kwon still has other charges against him in many other jurisdictions including South Korea, Singapore, and many others.
