Investors drop class-action lawsuit against Terraform Labs and Do Kwon

The dropping of the suit came amid Terra facing a lawsuit brought by the U.S. Securities and Exchange Commission and Do Kwon possibly nearing the end of his sentence in Montenegro.

A group of investors behind a class-action lawsuit against Terraform Labs and its co-founder Do Kwon over fraud allegations have dropped the case.

In a Sept. 28 filing in United States District Court for the Northern District of California, lawyers representing plaintiff Nick Patterson, who filed the lawsuit on behalf of investors, filed a notice of voluntary dismissal only against Terraform and Kwon. The notice did not explicitly state the reasons for dropping the case without prejudice.

“The [Terraform Labs] Defendants have neither answered the complaint […] nor filed motions for summary judgment,” said the filing. “Because the Court has not certified the proposed class for any purpose in this case and this dismissal is without prejudice, it will not bind members of the proposed class.”

1/ In another win for Terraform Labs, the class-action lawsuit alleging fraud against TFL and @stablekwon has been voluntarily dismissed in the U.S. District Court for the Northern District of California.https://t.co/oYfkblOf0H

— Terra Powered by LUNA (@terra_money) September 30, 2023

Patterson’s legal team filed the lawsuit in June 2022 following the collapse of Terraform Labs, which many attributed to kicking off a major crypto market crash. Kwon and the company have since been the target of many authorities globally for their role in an alleged scheme aimed at defrauding investors.

In February, the U.S. Securities and Exchange Commission filed a civil suit against Kwon and Terra for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud”. Authorities in Montenegro arrested Kwon in March and subsequently sentenced him to 4 months in prison for using false travel documents. At the time of publication, it was unclear if he will be released in Montenegro or face extradition to the U.S. or South Korea.

Magazine: Terra collapsed because it used hubris for collateral — Knifefight