Terra Investors Reportedly Preparing to Sue Do Kwon for Fraud
After Terra's collapse last week, South Korean investors are reportedly preparing to sue Do Kwon for fraud.
- South Korean investors are reportedly preparing to sue Terraform Labs CEO Do Kwon for fraud over Terra's $40 billion collapse.
- Per the local news media report, the plaintiffs will also seek a provisional seizure of Kwon's property.
- Terraform Labs' in-house legal counsel resigned amid the crisis, leaving the company dependent exclusively on outside counsel.
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The South Korean law firm LKB & Partners is reportedly preparing to sue Terraform Labs co-founder and CEO Do Kwon for fraud on behalf of investors financially harmed by Terra’s collapse last week.
Terra’s Do Kwon Faces Lawsuit
Terra’s disastrous implosion appears to be spilling beyond the crypto market and into South Korea’s judicial system.
According to a Wednesday report from local outlet Munhwa Ilbo, South Korean investors who suffered losses from Terra’s sudden collapse last week are planning to sue Terraform Labs co-founder and CEO Do Kwon for fraud. Per the report, the affected investors are seeking a provisional seizure of his property. Kim Hyeon-Kwon, a partner at LKB & Partners—a top South Korean law firm representing the investors—has told the local newspaper that the firm is working on filing a police report against Kwon before the Seul Metropolitan Police Agency.
“There are related investors inside the law firm, and we plan to file a complaint against CEO Kwon with the Financial Investigation Unit of the Seoul Metropolitan Police Agency,” he told Munhwa Ilbo. Per the report, the firm also plans to file a request with the Public Prosecutors’ Office of Seoul Southern District to seek provisional seizure of Kwon’s property next week.
Separately, chatter on social media and multiple reports from local media outlets indicate that Kwon and another Terra co-founder, Daniel Shin, may face multiple lawsuits in South Korea from several other groups of investors. It comes after Kwon and Shin’s creation, Terra, suffered a dramatic death spiral last week due to the collapse of its UST and LUNA tokens.
Terraform Labs, the company Kwon and Shin founded to launch Terra, has been dealing with the fallout since, with some Terra fans calling for the launch of a new ecosystem without the firm’s involvement. The company has also been left without an internal legal council after its in-house team, comprised of Marc Goldich, Lawrence Florio, and Noah Axler, resigned following Terra’s implosion. The LinkedIn profiles of the three lawyers indicate that they all stopped working for the company sometime in May.
Besides facing LUNA and UST investors in court, Kwon will also likely have to explain the Terra debacle before the South Korean parliament. On Tuesday, another local outlet reported that South Korean parliamentary member Yun Chang-Hyun had called for an immediate hearing on Terra, calling local crypto exchange officials and Kwon as witnesses.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.