A class-action lawsuit against Terraform Labs and Do Kwon is dropped
A group of investors has decided to drop their class-action lawsuit against Terraform Labs and its co-founder, Do Kwon, over fraud allegations. The dismissal notice was filed in the United States District Court for the Northern District of California. The reasons for dropping the case were not explicitly stated in the notice. The defendants had not responded to the complaint or filed any motions for summary judgment. Since the proposed class had not been certified by the court, this dismissal without prejudice will not bind members of the proposed class.
Background of the lawsuit against Terraform Labs and Do Kwon
The lawsuit was initially filed by investor Nick Patterson in June 2022 after Terraform Labs’ collapse, which was seen as a catalyst for a major crypto market crash. The company and its co-founder have faced scrutiny from authorities globally for their alleged involvement in a scheme to defraud investors. In February, the U.S. Securities and Exchange Commission filed a civil suit accusing Kwon and Terra of orchestrating a multi-billion dollar crypto asset securities fraud. Kwon was arrested in Montenegro in March for using false travel documents and was subsequently sentenced to four months in prison.
Hot Take: Class-action lawsuit dropped against Terraform Labs and Do Kwon
The recent decision by investors to drop their class-action lawsuit against Terraform Labs and Do Kwon comes as a surprise. While the reasons for dropping the case were not disclosed, it is possible that there were strategic considerations or other factors at play. This development may have significant implications for both Terraform Labs and Do Kwon, as they can now focus on rebuilding their reputation and addressing any legal issues that may arise from other investigations. It remains to be seen how this dismissal will impact the broader crypto community and the ongoing scrutiny of fraudulent activities in the industry.
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