Triple Arrow: Three Arrows Capital Liquidators File $1.3 Billion Lawsuit Against Terraform Labs
Date: 2024-08-13 Author: Oliver Abernathy Categories: BUSINESS
The liquidators of the bankrupt hedge fund Three Arrows Capital (3AC) have filed a $1.3 billion lawsuit against Terraform Labs. According to the liquidators, it was Terraform Labs’ actions that led to significant losses for the fund after the cryptocurrency market crash in 2022, Bloomberg reported on Monday.
The conflict dates back to May 2022, when the Terra network faced the collapse of its algorithmic stablecoin terraUSD (UST) and its accompanying token LUNA. These events led to the loss of more than $40 billion, despite the assurances of Terraform Labs co-founder Do Kwon. As early as July 2022, Three Arrows Capital was forced to file for bankruptcy, citing irreversible losses due to the collapse of Terra.
3AC liquidators claim that Terraform Labs intentionally misled the fund into purchasing Luna and TerraUSD tokens. Court documents state that the market for these assets was artificially inflated before it completely collapsed, which caused significant financial losses for Three Arrows Capital.
In January 2024, Terraform Labs filed for bankruptcy in the Delaware State Court in the United States. In April 2024, Do Kwon was found guilty by a Manhattan jury of civil fraud under charges brought by the US Securities and Exchange Commission (SEC).
Do Kwon is currently in Montenegro, where he was arrested in March 2023 for attempting to use false documents to travel. The Montenegrin authorities have not yet made a final decision on which country to extradite him to – requests for his extradition have been received from both South Korea and the United States.
