Scott+Scott is representing investors in a class action lawsuit against Defendants TerraForm Labs Ptd Ltd. (“TFL”), Jump Crypto, Jump Trading LLC, Republic Capital, Republic Maximal LLC, Tribe Capital, DeFinance Capital/Definance Technologies Oy, GSR Markets Limited, and Three Arrows Capital Ptd Ltd. (collectively, the “Luna Foundation Guard”), and Individual Defendants Nicholas Platias and Do Kwon.
TFL sold a host of digital assets known at the Terra Tokens without first registering these securities with the Securities and Exchange Commission. TFL’s largest digital assets by market cap (UST and LUNA tokens), in particular, were also the subject of a series of misleading statements and omissions meant to fraudulently induce investors to purchase these tokens. Specifically, TFL and the Luna Foundation Guard repeatedly promoted the stability, sustainability, and future growth prospects for UST/LUNA to retail investors. This marketing scheme capitalized on the influence and trust in the members of the Luna Foundation Guard had amongst the crypto sector to attract investors and lure them into purchasing the UST/LUNA tokens at artificially inflated prices. After the instability and unsustainability of UST and LUNA was exposed, these tokens went into a death spiral, losing over 90% of their respective values in under one week.
As reported by the New York Times article “How a Trash-Talking Crypto Founder Caused a $40 Billion Crash,” TFL’s CEO (along with the Luna Foundation Guard) “hyped the Luna and TerraUSD cryptocurrencies. Their failures have devastated some traders, though not the investment firms that cashed out early…. The downfall of Luna and TerraUSD offers a case study in crypto hype and who is left holding the bag when it all comes crashing down.”