An Illinois resident, Nick Patterson filed a class action lawsuit against Terraform Labs (TFL), its founder Do Kwon and several VC firms that make up the Luna Foundation Guard (LFG), accusing them of selling unregistered securities and misleading investors.
The other defendants involved in the lawsuit are Jump Crypto, Jump Trading, Republic Capital, Definance Capital, GSR Markets, Three Arrows Capital, Nicholas Platias, and Tribe Capital.
The lawsuit has been filed in the Northern District of California by the law firm Scott+Scott LLP.
According to the plaintiff the “Terra Tokens” were unregistered securities, however they were not marketed as such.
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The filing includes several screenshots from Twitter proving the above point. One such tweet was made by Nicholas Platias, author of the Anchor white paper.
Platias said in the court filing that Anchor’s interest rate was “stable” and the DeFi protocol offered a “low-volatility yield” with a “reliable rate of return”.
However, the plaintiff’s lawyers argued that “TFL and the Luna Foundation Guard misled U.S. investors concerning the stability of UST and LUNA, as well as the sustainability of Anchor.”
Similarly, Three Arrows Capital’s (3AC) co-founder Su Zhu is accused of telling people to take loans out on their bitcoin to use the proceeds on Anchor.
The lawsuit filing says that “seven days later, immediately following the UST collapse, this post was deleted.”
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