After the Terra stablecoin mining incident, a class action lawsuit against Terraform Labs has been brought against them and a host of crypto companies for the fall of terrausd. Nick Patterson, a plaintiff in the lawsuit against Terraform Labs (TFL), filed it on behalf others who are similarly placed and Scott+Scott LLP.
A Class-Action Lawsuit Has Been Filed Against TFL and Affiliated Firms — Plaintiffs Claim Terra-Based Tokens Were Unregistered Securities
Terraform Labs, according to documents filed in the U.S. District Court Northern California, is charged with selling securities that are not registered and misleading investors. TFL, Jump Crypto and Jump Trading are all named in the suit. Nicholas Platias is also included. Patterson and the group of plaintiffs accuse the defendants of “repeatedly touting the stability of UST.”
TERRAFORM LABS AND CO-FOUNDER DO KWON SUED IN U.S. COURT OVER COLLAPSE OF STABLECOIN TERRAUSD – COURT FILING
— *Walter Bloomberg (@DeItaone) June 18, 2022
The lawsuit also claims that Terra-based tokens are unregistered securities. “The Terra tokens are securities that the TFL failed to register before selling,” the plaintiff’s lawyers insist. Fatman was the whistleblower who revealed the case on June 18, 2022. tweetedCalifornia filed the lawsuit. According to the lawsuit, investors were informed that UST was stable and Anchor was stable.
Nicholas Platias, author of the Anchor white paper is quoted in the court filing as saying Anchor’s interest rate was “stable” and the decentralized finance (defi) protocol offered a “low-volatility yield” with a “reliable rate of return.” “TFL and the Luna Foundation Guard misled U.S. investors concerning the stability of UST and LUNA, as well as the sustainability of Anchor,” the plaintiff’s argument notes.
The plaintiffs also quote a tweet made by the Anchor Protocol’s official Twitter account on March 17, 2021, which said:
Anchor isn’t your typical money market. Depositors can expect a stable 20% interest rate from the protocol. Borrowers are limited to liquid staking derivatives.
Three Arrows Capital co-founder accused of telling people to take out loans against Bitcoin and deposit proceeds into Anchor
The lawsuit against TFL and the group of hedge funds follows the recent lawsuit against Binance US, which is accused of selling unregistered securities and advertising terrausd (UST) as “safe.” Further another lawsuit against Coinbase has been filed concerning the UST fallout as plaintiffs accuse Coinbase of passing UST off “as just another stablecoin.” The lawsuit was initiated by Erickson Kramer Osborne and the law firm Milberg Coleman Bryson Phillips Grossman LLP.
TFL is also being sued by Nicholas Platias and Do Kwon. Jump Crypto, Jump Trading. Republic Capital. Definance Capital. GSR Markets. Three Arrows Capital (3AC), co-founder Su Zhu, who was accused of telling customers to borrow bitcoins to fund Anchor. “Seven days later, immediately following the UST collapse, this post was deleted,” the lawsuit against TFL details. According to reports, 3AC faces financial difficulties. Crypto community members accuse the crypto hedge fund as being insolvent.
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