Investors Abandon Class-Action Lawsuit Against Terraform Labs and Do Kwon

A significant development unfolded in the legal battle between investors and Terraform Labs, the cryptocurrency company founded by Do Kwon. The class-action lawsuit, which had been underway in the United States District Court for the Northern District of California, has taken an unexpected turn. Lawyers representing the plaintiff, Nick Patterson, who initiated the lawsuit on behalf of investors, submitted a notice of voluntary dismissal specifically against Terraform Labs and its co-founder Do Kwon on September 28th.

Remarkably, the notice did not provide explicit reasons for discontinuing the case without prejudice, leaving the motivations behind this decision somewhat ambiguous. The filing pointed out that Terraform Labs had not yet responded to the complaint or filed motions for summary judgment. Additionally, the court had not certified the proposed class for any purpose in the case, emphasizing that the dismissal would not bind members of the proposed class.

This legal maneuver follows Patterson’s lawsuit, filed in June 2022, which alleged fraudulent activities on the part of Terraform Labs and Kwon. The legal action was triggered by the collapse of Terraform Labs, a situation that many believed had triggered a significant crash in the broader cryptocurrency market. Subsequently, Kwon and the company faced scrutiny from authorities worldwide due to their alleged involvement in a scheme aimed at defrauding investors.

Notably, in February, the U.S. Securities and Exchange Commission (SEC) filed a civil suit against Kwon and Terra, accusing them of orchestrating a multi-billion dollar crypto asset securities fraud. This intensified the legal challenges faced by Kwon and the company. In March, authorities in Montenegro arrested Kwon for using false travel documents, leading to a four-month prison sentence. Currently, the situation surrounding his release, whether in Montenegro or through extradition to the U.S. or South Korea, remains uncertain. The dismissal of the class-action lawsuit adds a layer of complexity to an already convoluted legal saga.

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