The plaintiffs in the class action lawsuit against TerraUSD and its affiliated companies voluntarily dismissed the case on Monday.
Matthew Albright filed a lawsuit on behalf of others against Terraform Labs (TFL), Pte Limited, and other affiliates in the Southern District Court of New York in August 2022.
The plaintiffs allege that the defendants falsely promoted, misrepresented, and offered the UST stablecoin and LUNA. Zhu Su, co-founder of failed crypto hedge fund Three Arrows Capital (3AC), announced the voluntary dismissal of a class action lawsuit through a tweet on January 10.
Matthew Albright, the lead plaintiff in the case, filed a notice with the Court announcing the voluntary dismissal of the case against the defendants. The defendants include Terraform Labs, Do Kwon, Delphi Digital Consulting, Luna Foundation Guard (LFG), Jump Trading, Nicholas Platias, and three others.
Albright and co-plaintiffs accuse TerraUSD and other defendants of falsely promoting UST, LUNA, and other related coins. According to the lawsuit, the defendants falsely represented the stability of the coin while laundering profits from Terraform Labs into private accounts.
3AC Blames FTX For TerraUSD’s Fallout
Claims can be linked to November tweets by 3AC cofounder Zhu Su that FTX and Alameda Research are manipulating the crypto market. Zhu claimed that FTX was part of a conspiracy that led to the downfall of UST.
Three Arrows Capital was hit hard by the crisis and soon went bankrupt due to the impact of Terraform Labs. Zhu Su and TerraUSD founder Do Kwon previously blamed Genesis and Alameda Research for the UST and LUNA crashes.
However, TerraUSD and its affiliates also face two other class action cases, which are still active. Bragar Eagle and Squire, a PC law firm, and Scott + Scott, a securities litigation and consumer rights firm, filed the lawsuit.
The Main Cause of TerraUSD Collapse, Is It a Hack?
Meanwhile, the investigation into the collapse is ongoing. On December 6th tweet, FatmanTerra alleged that TFL claims that UST recorded a fake hack attack. FatmanTerra, is an integral part of the puzzle in the collapse of TerraUSD, and has been reporting the collapse of the company for more than a year. Twitter users have helped the crypto community to bring the founder of TerraUSD to court.
According to Fatman’s tweet, Terraform Labs dumped over $450 million of UST on the open market days before the implosion.
Fatman cites data from Cycle_22, an anonymous researcher who discovered the insolvency of Hodlnaut, a Singapore-based crypto lender. The data shows that TFL started spending millions of UST a few days before depeg.
According to Fatman, spending that amount of UST in such a short period of time reduces the liquidity of the stablecoin and reduces the peg.
Dump UST and $2.7 billion removed by TFL through Degenbox contributed to the implosion. Fatman stated that Do Kwon and Terraform Labs withdrew real dollars from the ecosystem, making UST redemption impossible.
In addition, the independent audit released by TFL and Luna Foundation Guard (LFG) to show efforts to redeem UST’s stake has not been completed. According to a Twitter user, the audit did not reveal the 47,000BTC sent to Jump Crypto by LFG.
This revelation further adds to the evidence against TFL and Do Kwon, who remain on the run from South Korean prosecutors.
Meanwhile, LUNA witnessed a price increase of 12.79% in the last 24 hours and is trading at $1.56. The LUNA price rally happened during the development of chain 2.0.
Jared from TFL revealed, via a tweet, the current version of TerraUSD Station undergoes automatic updates, which is not compatible with Classic. Jared told Station users on Classic that the Station update will happen on January 10, 2023. Cover image from Pixabay, LUNA chart from Tradingview.