Do Kwon and Other Entities Hit With New Class Action Lawsuit for Alleged False Promotion of Terra’s Tokens

TerraForm Labs CEO Do Kwon is facing a new class action lawsuit for his role in the collapse of the Terra ecosystem earlier this year.

Kwon allegedly promoted Anchor, a lending platform based on LUNA, UST, and Terra, even though he knew the project was unsustainable.

Florida resident Michael Albright has filed a complaint in the United States District Court for the Southern District of New York on behalf of everyone else who purchased LUNA and UST and suffered financial losses.

Other cryptocurrency companies have also been targeted in lawsuits, including blockchain firm TerraForm Labs and its former head of research, Nicholas Platias.

“Defendants falsely promoted UST, Luna, and other related Terra coins via social media and other web-based and email channels. Guaranteed 20% annual return on coins deposited into Anchor Protocol (“Anchor”), Terraform Labs’ high-yield savings application on-chain. ”

Plaintiffs also say that the Terra token acted like a Ponzi scheme, causing LUNA to eventually crash when demand for the algorithmic stablecoin UST declined.

“UST amounts to a Ponzi scheme that is only sustained by the demand for UST generated by the anchor’s excess yield. Keep the Luna price relatively low and able to support the UST’s peg.

However, as soon as the demand for UST declines and users start mass-swapping UST for Luna, Luna could enter a vicious cycle of hyperinflation, thereby causing its own price and UST to collapse. ”

Albright said the debacle that ultimately caused what is considered the biggest collapse in cryptocurrency history took a huge emotional toll on those who bought LUNA.

“Losses for retail investors are huge. New York. The Times reported that Redditors had shared suicide hotline numbers due to the extent of the loss of some users. has lost its value. ”

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Featured Image: Shutterstock/Mia Stendal

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