The founders of Terraform Labs, the company that created Luna, have become targets of the crypto industry’s ire after the stablecoin crashed last month. But some lawyers are still bullish, saying cryptocurrency serves a purpose and could transform finance.
A South Korean law firm is representing investors who lost millions of dollars due to last month’s $40 billion crash of algorithmic stablecoin TerraUSD and its sister token Luna.
Founders of Terraform Labs, Do Kwon and Daniel Shin, who created Luna, have become targets of the crypto industry’s ire after the stablecoin lost its peg to the dollar. Its stabilization mechanism failed and caused Luna to undergo hyperinflation, reducing its value to virtually zero.
Seoul-based LKB & Partners told local media it will be filing a complaint against the Terraform founders, bringing two charges, including fraud. The firm also told local newspaper Munhwa Ilbo that it filed an attachment order to the Public Prosecutors’ Office of the Seoul Southern District to seize Kwon’s properties.
The claimants are believed to include LKB & Partners lawyers themselves. The firm did not respond to a request for comment.
More potential lawsuits may be on the way. Investors who suffered losses from the Luna crash have joined movements against Kwon and Shin. A community called LUNAscam, hosted on the South Korean online platform Naver, has gathered more than 1,700 members since it was created in mid-May.
It is unclear if Terraform has engaged external counsel for legal advice. Last year, Kwon was represented by Dentons when the U.S. Securities and Exchange Commission accused him of violating its own rules and the due process clause of the U.S. Constitution.
The crash of Luna has also caused an implosion within Terraform. The company’s legal team, including chief corporate counsel Lawrence Florio, general counsel Marc Goldich, and regulatory counsel Noah Axler, resigned shortly after the stablecoin’s colossal collapse.
According to South Korean media reports, Kwon may be summoned to appear before the local government to testify. National politician Yun Chang-Hyun has requested that Kwon and other executives of local crypto exchanges explain their actions while the de-peg was taking place. Local police have also launched an investigation for criminal action against Do Kwon.
Lawyers point out that any lawsuit against Kwon and his companies will be significantly impacted by the conclusion of police investigations.
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