- Do Kwon’s whereabouts are currently unknown
- Kwon is currently wanted by South Korean prosecutors
- Interpol issued a red notice requesting his arrest
The whereabouts of Terraform Labs co-founder and CEO Do Kwon may be unknown at the moment, but that hasn’t stopped hundreds of investors, who lost around $57 million, from suing him over the spectacular collapse of the algorithmic stablecoin TerraUSD (UST).
The lawsuit was filed against Kwon on Sept. 23 on behalf of 359 investors who lost millions in the Terra crash. The official website of Singapore’s judiciary revealed that the next hearing on the suit was scheduled for Wednesday.
The lawsuit alleged that TFL’s CEO lured investors into buying the algorithmic stablecoin TerraUSD with “fraudulent misrepresentations.” He also claimed that Kwon was well aware of the stablecoin’s “structural weakness,” as stated in court documents shared by the Wall Street Journal.
The lawsuit is being led by a Spanish citizen named Julian Moreno Beltran, who allegedly lost about $1.1 million worth of TerraUSD investment, and a Singaporean named Douglas Gan Yi Dong. Several other plaintiffs said they were “entitled to claim loss and damage they suffered when purchasing the UST coupons,” including “compensated damages,” court documents revealed.
In addition to Kwon, other defendants named in the lawsuit include Nicholas Platias, head of research at Terraform Labs, and the Luna Foundation Guard (LFG), the fund created to support the development of the Earth’s ecosystem. A spokesperson for Terraform Labs, in a statement to the WSJ, disputed the allegations in the $57 million lawsuit filed against Kwon and others in Singapore.
“There is a fundamental difference between a public market event and fraud… The risks were publicly known and discussed, and the underlying code was open source,” the WSJ said.
Kwon is currently wanted by South Korean prosecutors, while Interpol has issued a red notice seeking his arrest. The crypto executive also faced a class action lawsuit in the US in June and is currently being investigated by the Securities and Exchange Commission (SEC) for possibly violating federal investor protection rules in the way it advertised its algorithmic stablecoin.
Despite all the allegations, Kwon has repeatedly denied that the project was a scam. In his most recent interview, Kwon declined to reveal his location for security reasons.
The TFL executive also claimed that he was not on the run and that he was not in hiding. Kwon also said he did not violate South Korea’s capital markets law. Terra’s algorithmic stablecoin UST collapsed in May and was eventually followed by the blockchain’s native LUNA token.