A class-action lawsuit that had been brought by a group of investors against Terraform Labs and its co-founder, Do Kwon, alleging fraud, has been withdrawn.
In a filing made on September 28 in the U.S. District Court for the Northern District of California, lawyers representing the plaintiff, Nick Patterson, who was suing on behalf of investors, voluntarily terminated their action against Terraform Labs and Kwon. The filing did not explicitly specify the reasons for the dismissal.
The filing stated, "[Terraform Labs] Defendants have neither responded to the complaint nor filed a motion for summary judgment. Because the Court has not certified the proposed class action in this case for any purpose and this dismissal does not constitute prejudice, no judgment will be entered. BINDING MEMBERSHIP IN THE PROPOSED CLASS."
The lawsuit had been initiated in June 2022 following the collapse of Terraform Labs, which many believed had triggered a significant cryptocurrency market crash. Both Mr. Kwon and the company have faced scrutiny and legal actions from authorities worldwide for their alleged involvement in schemes aimed at defrauding investors.
In February, the U.S. Securities and Exchange Commission filed a civil complaint against Kwon and Terra, accusing them of orchestrating a multi-billion dollar crypto-asset securities fraud. Kwon was arrested by Montenegrin authorities in March and later sentenced to four months in prison for using false travel documents. It remains uncertain whether he will be released in Montenegro or potentially face extradition to the United States or South Korea.
