Key Points:
- Three Arrows liquidators are seeking $1.3 billion from TerraForm Labs over losses from the 2022 collapse of its TerraUSD and Luna tokens.
- TerraForm Labs is accused of inflating the prices of TerraUSD and Luna to induce Three Arrows to invest heavily.
According to Bloomberg, Three Arrows liquidators are seeking at least $1.3 billion from TerraForm Labs, the digital asset firm co-founded by Do Kwon.
Read more: Three Arrows Capital Liquidator Accuses Founders Of Refusal To Cooperate Asset Recovery
Three Arrows Liquidators Seeks $1.3 Billion from TerraForm Labs Over 2022 Crypto Collapse
It is part of the claims of huge losses that Three Arrows sustained during the May 2022 collapse of TerraForm’s TerraUSD and Luna tokens.
According to court documents, the defendants allegedly manipulated TerraUSD and Luna prices by inflating them to entice Three Arrows into heavy investment. If the tokens were to crash, it would not only wipe out the investment from Three Arrows but trigger severe losses in other holdings as well.
Once a major player within crypto hedge funds, Three Arrows Capital collapsed shortly after the crash of TerraUSD and Luna—yet another stablecoin that shook large crypto businesses. As a result of the crash, a British Virgin Islands court ordered the appointment of liquidators from consultancy Teneo to recover the hedge fund’s assets to pay off outstanding debts.
The Three Arrows liquidators have widened their attempts to recover funds from the hedge fund’s founders, Su Zhu and Kyle Davies, among other related entities. The unfolding legal actions will be aimed at cushioning the blow on the Three Arrows creditors.
TerraForm Faces Bankruptcy and Fraud Charges as Do Kwon Faces Extradition
A jury found TerraForm and Kwon liable for fraud in the US lawsuit over Luna’s collapse back in April. TerraForm filed for Chapter 11 bankruptcy in January and is in the process of liquidation. Kwon was also charged in the US and South Korea and was arrested in Montenegro last year. He can be extradited to South Korea, a Montenegrin court ruled recently.
The recovery from TerraForm remains indeterminate as liquidation processes are still underway.
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Source: Coincu
