Three Arrows Files $1.3 Billion Suit Against TerraForm Labs Citing LUNA’s Market Manipulation

Liquidators of Three Arrows Capital have filed a lawsuit against TerraForm Labs for $1.3 billion in light of allegations of market manipulation.

The liquidators of Three Arrows Capital (3AC), the crypto hedge fund that is now defunct, have filed a lawsuit against TerraForm Labs in an effort to recover $1.3 billion in damages.

This legal action is a component of the ongoing endeavors to recoup funds for the creditors of Three Arrows following the fund’s liquidation.

The lawsuit is the result of losses incurred during the 2022 collapse of TerraUSD and LUNA, tokens that Do Kwon co-founded. The lawsuit claims that TerraForm’s market manipulation resulted in the catastrophic crisis of 2022, which subsequently contributed to the collapse of Three Arrows.

According to Bloomberg, TerraForm persuaded Three Arrows to acquire Luna and TerraUSD by manipulating the market for these tokens in a manner that artificially inflates the price of the assets prior to their destruction.

Additionally, the liquidators are of the opinion that the LUNA collapse had a substantial effect on the value of its other digital assets. In April 2022, Three Arrows’ LUNA holdings reached a zenith of approximately $462 million. As a result of a substantial TerraUSD selloff, this value plummeted to just over $2,700 by mid-May.

Soon after LUNA’s collapse, Three Arrows, which was once a prominent figure in the crypto hedge fund industry, collapsed. In an effort to satisfy the hedge fund’s creditors, a British Virgin Islands court has appointed liquidators from the consulting firm Teneo to recover assets. The liquidators are also pursing claims against the fund’s founders, Su Zhu and Kyle Davies, in addition to this legal action against TerraForm.

Nevertheless, the fate of this litigation is still uncertain, particularly in terms of the potential recovery from TerraForm. Last year, Do Kwon was apprehended in Montenegro subsequent to the failure of his initiative. He also encountered accusations in South Korea, his country of origin, and the United States.

Kwon was recently ordered to be extradited to South Korea by a court in Montenegro. Nevertheless, this decision has encountered numerous setbacks.

Montenegro’s Supreme Court postponed the extradition at the request of the country’s chief prosecutor, Minister of Justice Andrej Milović, in the most recent postponement, confirmed on August 8. This postponement serves to prolong the legal matter concerning TerraForm Labs and Kwon.

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