Call UST collapse the main cause of bankruptcy! 3AC liquidator demands Terraform Labs to compensate

According to Bloomberg's report on Monday, the liquidators of bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC) have filed a lawsuit against Terraform Labs, demanding $1.3 billion in compensation for the losses suffered by the fund after its collapse in 2022. In June 2023, the liquidator also claimed $1.3 billion from the founders of 3AC, Su Zhu and Kyle Davies.

The cause of this case can be traced back to May 2022, when Terra Network's algorithmic stablecoin terraUSD (UST) and its associated token LUNA still suffered a $40 billion collapse under the guarantee of co-founder Do Kwon. In July, 3AC filed for bankruptcy due to significant losses and stated that Terra's collapse resulted in irreparable losses.

According to Bloomberg, the liquidator stated in court documents that this case accuses Terraform of manipulating the Luna and TerraUSD markets, "artificially inflating asset prices" to induce 3AC to purchase these tokens, after which the value of these tokens was completely erased.

Terraform filed for bankruptcy in Delaware, USA in January 2024. In April 2024, Do Kwon was charged with civil fraud by the US Securities and Exchange Commission (SEC) and found guilty by a Manhattan jury. Do Kwon is currently stranded in Montenegro, where he was arrested in March 2023 for using a fake passport and has been detained ever since. He is currently waiting for the final decision of the Montenegrin authorities on his extradition location, as both South Korean and US authorities have requested extradition.