Terraform Labs Faces a Class Action Lawsuit Alleging Racketeering

Ethereum World News
Ethereum World News August 29, 2022
Updated 2022/08/29 at 11:44 AM
3 Min Read
  • Terraform Labs has been sued again, this time over allegations of racketeering.
  • The plaintiff Matthew Albright and lawyers conducted an investigation by reviewing several of Terraform Lab’s public statements.
  • The company is facing other lawsuits and investigations.

Terraform Labs is facing yet another lawsuit, this time over alleged racketeering. Lawyers on behalf of plaintiff Matthew Albright filed a class action lawsuit, according to a court document. The lawsuit claims that Terraform Labs violated the Racketeer Influenced and Corrupt Organizations Act.

The lawsuit has been filed on behalf of all persons and entities who purchased the Terra coins between May 1, 2019, and June 15, 2022. Albright and his attorneys conducted an investigation, which included reviewing press releases, public statements, and media reports, and “other commentary analysis and publicly disclosed reports and information about defendants.”

It claims that Terraform Labs falsely promoted UST, Luna, and other associated crypto assets via various social channels. The filing reads,

“In particular, Defendants touted the stability of the coins and guaranteed 20% annual returns on coins deposited in Terraform Labs’ high-yield savings application on the Terra blockchain—the Anchor Protocol (“Anchor”). Meanwhile, certain Defendants engaged in a pattern of money laundering activity, siphoning billions of dollars from Terraform Labs to a series of private cryptocurrency wallets.”

It also said that the UST stablecoin amounted to a Ponzi scheme that was only kept alive because of the high yields of the Anchor Protocol. This led to a vicious cycle of hyperinflation, it concludes, that later led to the collapse of LUNA and UST.

It also cites a governing council member of the Lunda Foundation Guard, Remi Tetot, who said in a blog post that it wasn’t sustainable. The lawsuit calls for “all actual, general, special, incidental, statutory, rescission, punitive, and consequential damages and restitution to which Plaintiff and the Class members are entitled,” among other reparations.

Never-Ending Woes for Terraform Labs

Since the crash of LUNA and UST, there have been a string of developments. The lawsuits and investigations piled on quickly, and the outlook does not look good for the company.

Most recently, Do Kwon and Terraform employees are facing fraud allegations from South Korean authorities. The home of co-founder Daniel Shin has also been raided by officials.

Meanwhile, Do Kwon gave his first public interview since the crash of the ecosystem. On social media, crypto enthusiasts heavily criticized the interview, saying that Kwon was attempting to generate pity and sugarcoat the crash.

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