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Highlights
- Three Arrows Capital now wants $1.3 billion from Do Kwon's former firm
- The new monetary claims hinges on market manipulation claims
- Tether and Celsius Network have related legal battle brewing
The legal challenges of bankrupt Terraform Labs are about to get complicated. This is because former crypto hedge fund giant Three Arrows Capital (3AC) has made a claim of $1.3 billion on the firm. 3AC has labeled the former of being behind its implosion in 2022.
The Growing Terraform Labs Challenges
The claims from the Su Zhu founded hedge fund hinges on the losses it suffered as a result of the collapse of TerraUSD and LUNA. The crypto lender allegedly purchased up to $190 million worth of Luna in the beginning of 2022 as part of a larger $1 billion deal that involved other investment firms.
However, a massive selloff of TerraUSD followed several months after, leading to a huge plunge in the value of the token. LUNA soon deteriorated as well.
The implosion of these assets at the time impacted 3AC severely owing to its exposure to both tokens. From holding up to $462 million worth of LUNA at the end of April 2022, the firm ended up with only a little above $2,700 by mid-May. According to liquidators for the hedge fund, the Do Kwon-led firm at the time inflated the valuation of these assets in a manipulative way.
In the court filing, the hedge fund claimed that the crash of the two crypto assets led to massive losses in the its investment as well as its other holdings. Upon its collapse in 2022, a British Virgin Islands court appointed liquidators to the crypto lender to enable it repay creditors.
Celsius Seeks to Claw Back $2.4B From Tether
It is not uncommon for bankrupt firms to explore ways to recall funds. Recently, Celsius Network sued Tether over Bitcoin transaction fraud. The lawsuit alleges that the USDT issuer conducted “fraudulent” and “preferential” transfers of Bitcoin amounting to over $3.5 billion.
However, Tether has refuted the $2.4 billion Bitcoin fraud claims levied against it. Paolo Ardoino, the firm’s CEO noted that Celsius Network’s claim is baseless considering that the Bitcoin in question was put to use on the request of the defunct exchange.
Amidst this new lawsuit from 3AC, Terra’s Do Kwon is still waiting for his extradition to South Korea. The Supreme Court of Montenegro delayed Do Kwon’s extradition recently in response to a request for the protection of legality filed by the the State Prosecutor’s Office (VDT) on August 2, 2024.
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