The class action was one of the many lawsuits brought against the company last year after the Terra-LUNA fiasco that wiped out billions of dollars as investors watched their funds vanish into thin air within a matter of days.
A federal court in Singapore has denied an appeal to dismiss a class action suit filed against Terraform Labs, the brains behind the former Terra blockchain, and its disgraced co-founder Do Kwon on November 30.
According to a Business Insider report, the duo filed a motion of appeal at the High Court in an attempt to get the suit dropped, but the court ruled in favor of the defendants, and the class action suit is now moving forward.
Class Action Suit to Move Forward
During the court hearing on Thursday, lawyers representing the company and its former CEO, who has recently been cleared for extradition in Montenegro, tried to turn the class action into an arbitration process.
Citing the company’s terms of service, the attorneys argued that users had relinquished their right to trial and joining a class-action suit. However, the court ruled against this argument, favoring the continuation of the lawsuit.
The so-called class action was one of the many lawsuits brought against the company last year after the Terra-LUNA fiasco that wiped out billions of dollars as investors watched their funds vanish into thin air within a matter of days.
Some of the investors, 375 individuals who lost funds during the Terra-LUNA fiasco, gathered together to file the lawsuit in September 2022. Julian Moreno Beltran, a Spanish citizen, and Douglas Gan from Singapore spearheaded the legal action, representing others who collectively claimed losses amounting to $57 million.
False Promotion of TerraUST
The plaintiffs alleged in the suit that Terraform Labs, Do Kwon, and other executives engaged in fraudulent misrepresentation in the promotion of the company’s algorithmic stablecoin, terraUSD (UST). According to the court document, the false misrepresentations deceived the investors into buying and staking the tokens, TerraUSD and its sister token LUNA, ultimately holding onto them as UST depegged from its 1:1 peg to the United States dollar in May 2022 and was trading at $0.10.
With the dismissal of the appeal, the case will now continue its course despite the defendant’s efforts to halt it.
In October, Terraform Labs also reportedly filed to dismiss the criminal charges brought against the company by the United States Securities and Exchange Commission (SEC) for violating federal laws and the sale of unregistered securities in the country.
The company said the financial watchdogs have been unable to make their case, therefore, the charges should be thrown out. However, the firm later rebutted the report, noting that it did not file such motion.