Do Kwon and Terraform Labs Face Class Action for Allegedly Selling Unregistered Securities

While most digital assets have seen significant gains this month, Terra’s Luna 2.0 has stagnated and lost 24.37% to bitcoin over the past 30 days. LUNA is down 89.8 percent from the token’s peak price two months ago on May 28. Additionally, whistleblower Fatman revealed that victims of the Terra collapse have filed a class action lawsuit against Terraform Labs, Do Kwon and Nicholas Platias.

@Fatman reveals that he got involved in Terra’s trial so that ” justice could take its course “.

On July 26, the whistleblower Fatman (@Fatmanterra on Twitter) shared a sign-up link for investors who were financially harmed by Terra’s collapse in mid-May. The case is being handled by law firm Scott+Scott and the defendants are Terraform Labs (TFL), Nicholas Platias and Do Kwon. In addition, Jump Crypto, Jump Trading, Republic Capital, Republic Maximal LLC, Tribe Capital, Definance Capital, GSR Markets Limited, Three Arrows Capital (3AC) and Luna Foundation Guard (LFG) are included.

Lawsuit Sign-Up Link Announcement for UST Victims

On May 11, as UST depegged, I created an account named FatMan and posted a proposal outlining how the LFG could use UST peg reserves to refund small holders in order to mitigate the most severe impacts of the crisis… (1/15)

– FatMan (@FatManTerra) July 26, 2022

In a Twitter thread discussing the trial, the whistleblower complimented Do Kwon’s intelligence but noted that the Terra co-founder did not use it for good. “Instead of using his genius for good, Do Kwon used it to create a scheme so convincing, ingeniously mixing real utility with outright lies, that it not only brought down thousands of investors, but also large funds that had been deceived despite solid research“, said Fatman noted in his discussion thread. Fatman added:

Instead of using his genius for good, Do used it to create a scheme so convincing, ingeniously mixing in real utility with sheer lies, that it not only led to the downfall of thousands of investors but also some big funds who had been hoodwinked in spite of solid research (9/15)

– FatMan (@FatManTerra) July 26, 2022

We will be joining the class action lawsuit filed in the United States by the international law firm Scott+Scott. We are also preparing actions in another jurisdiction. We demand a fair trial to expose all of TFL’s activities. [and] Do Kwon and for justice to take its course.

South Korean authorities investigate Terra co-founders Do Kwon and Daniel Shin.

Of the 13,099 existing crypto-currencies, LUNA is ranked 148 with its market valuation of $261.63 million. Since LUNA’s all-time high on May 28, when it reached $18.87 per unit, LUNA has lost 89.8% of its value.

The total locked-in value (TVL) of LUNA in the decentralized finance (defi) world is $26.88 million, while just over $12 million is still held in defi protocols on the Terra Classic chain. In addition to the Scott+Scott lawsuit, Terra co-founder Daniel Shin is banned from leaving South Korea.

South Korean law enforcement officials are investigating TFL, Shin, and Kwon. and Fatman claim that a rough translation of the article states that “the prosecutor also raised the possibility of cooperating with Interpol to issue a red notice for the extradition of Do Kwon“. The class action complaint published by Scott+Scott asserts that all of the Terra tokens TFL issued are unregistered securities and that TFL never registered with the Securities and Exchange Commission (SEC). In another thread from Fatman, the whistleblower pointed out that it was difficult to express how badly some Terra investors were affected by the collapse, he concluded by noting:

It’s hard to put into words how deeply this has affected victims. Thousands of people have lost years of their savings – I can’t convey their heartbreak in a tweet. It takes a true sociopath to see all of this and laugh without an aota of remorse or regret (13/15)

– FatMan (@FatManTerra) July 26, 2022

It’s time to take matters into our own hands. I’m tired of seeing our space invaded by crooks who think they can brazenly steal from thousands of innocent people and get away with it. People like Do Kwon are making this industry rot. It’s time for a purge so that crypto can be reborn again.