The plaintiffs in a lawsuit against Terraform Labs (TFL) and its affiliated entities voluntarily withdrew their case on Monday. The dismissal of the suit was announced by Zhu Su, a co-founder of Three Arrows Capital, on Twitter on Tuesday.
Previously, the plaintiffs, led by investor Matthew Albright, had accused Do Kwon, Nicholas Platias, Delphi Digital Consulting, Terra and the Luna Foundation Guard of manipulating and deceiving the public regarding the stability of the cryptocurrencies UST and LUNA and other related coins.
"In particular, Defendants touted the stability of the coins and guaranteed 20% annual returns on coins deposited in Terraform Labs' high-yield savings application on the Terra blockchain—the Anchor Protocol ("Anchor")," the suit, which was filed in August 2022, said.
According to the plaintiffs, investigations revealed that the defendants had carried out money laundering activities. Before the collapse of the ecosystem, the defendants also had allegedly siphoned off billions of dollars from the fund.
Su claimed that Alameda Research and FTX had been involved in a conspiracy that led to the collapse of UST. According to Su, FTX was a part of the scheme.
Due to their exposure to Terraform Labs, Three Arrows Capital went bankrupt. Su and Do Kwon initially blamed Alameda Research and Genesis for the crash of LUNA and UST.
Curious how long it will take cryptonative media to report on this sudden voluntary dismissal of class action against Luna foundation and Luna investors pic.twitter.com/8SyMhB4u4g
— Zhu Su 🔺 (@zhusu) January 10, 2023
Other active lawsuits against Terra
At least two of the multiple lawsuits against TerraUSD are still active. These are the lawsuits filed by consumer rights and securities litigation firm Scott + Scott and law firm Bragar Eagle and Squire.
Do Kwon has been on the run from the law. According to a report from South Korea's Chosun Ilbo, Do Kwon is currently in Serbia. Interpol has issued a red notice for his arrest, and South Korea has asked him to hand over his passport.
Despite the various lawsuits against Terra, the ecosystem is starting to show signs of recovery. For the last six months, the value of the LUNC token LUNC has increased by 81.9 percent. Over the past 24 hours, it has gained 3.08 percent. Meanwhile, LUNA experienced a price surge of 12.79 percent in the last 24 hours.
Manipulation causes Terra's collapse
FatmanTerra, a cryptocurrency and finance researcher on Twitter, has been reporting on Terra's collapse and assisting the crypto community in bringing its founder to justice for over a year. On December 6, he criticized TFL for allegedly spreading false information regarding UST's alleged hack attack.
🧵 New blockchain data reveals the root cause of the May UST depeg. In the 3 weeks leading up to the depeg, one entity dumped over $450m of UST on the open market. 4 days after their last sale, UST started collapsing.
— FatMan (@FatManTerra) December 6, 2022
That entity? None other than Terraform Labs. Details inside. pic.twitter.com/aFfzgpBZ5A
In his December 6 tweet, Fatman noted that Terraform Labs had dumped more than $400 million worth of UST on the open market before its collapse. Fatman claimed that the amount of UST that TFL had dumped within a short period of time reduced the stablecoin's liquidity.
The amount of UST that TFL was able to remove from the ecosystem through Degenbox and the dump contributed to the collapse of Terra. According to Fatman, Do Kwon and his associates had withdrawn real dollars from the community, which rendered UST impossible to redeem.
Moreover, an independent audit conducted by TFL and Luna to show how it had tried to redeem UST was unable to capture the 47,000 BTC sent by Luna to Jump Crypto.