Law firm Bragar Eagle & Squire has filed a class action lawsuit against TerraForm Labs (TFL), its chief Do Kwon, and relevant parties — the first officially made in the US so far after the collapse of the Terra token (LUNA) and stablecoin (UST).
The news comes just days after Korean authorities raided the offices of top crypto exchanges, as well as suspects’ homes, in a bid to uncover if Kwon made off with investors’ cash as their tokens plummeted.
Representing “all persons and entities” who purchased Terra tokens, the lawsuit claims that defendants knowingly deceived retail investors into buying unregistered securities at an inflated price.
A press release further alleges that defendants endorsed statements they knew were false and misleading, knowingly made false claims themselves while omitting true facts, and failed to register Terra tokens, therefore violating the Securities Act.
Apart from securities-related claims, Bragar Eagle & Squire are also seeking charges for:
- Aiding and abetting,
- Civil conspiracy,
- Violating the Racketeer Influenced and Corrupt Organisations Act (RICO) for “a pattern” of racketeering,
- and Violating California Common Law by possessing the inflated value of Terra tokens.
Bragar Eagle & Squire, which appears to have a slew of poor Google reviews, has filed several securities lawsuits against other crypto firms, including Celsius, Solana, and Marathon Digital Holdings.
The law firm is still seeking a main plaintiff in its Terra lawsuit.
Terra lawsuits and probes extend beyond Do Kwon
The lawsuit points the finger at related entities beyond TerraForm Labs and Do Kwon, including Jump Crypto, Tribe Capital, DeFinance, and Three Arrows Capital, all of which were part of the Luna Foundation Guard (LFG) — which it told retail investors would maintain UST’s peg to the dollar. Terra’s head of research Nicholas Platias is also named.
Retail investors aren’t the only ones seeking answers from Do Kwon and TFL. The company was reportedly fined nearly $80 million in South Korea for tax evasion. Last month, the country banned current and former Terra employees from leaving the country amid investigations.
Last week, South Korean authorities raided seven crypto exchanges in a bid to uncover whether Terra’s demise was intentionally caused by Kwon. Coinone, Upbeat, Bithumb, four local exchanges, and the homes and offices of related suspects were raided last Wednesday.
Edit 9:25 UTC, August 1: This article previously said the lawsuit was the third to be filed — in fact it’s the first in the US.