Three Arrows liquidators are requesting $1.3 billion from TerraForm Labs in compensation for the losses suffered as a result of the 2022 collapse of its TerraUSD and Luna tokens.
The liquidators of Three Arrows are reportedly requesting a minimum of $1.3 billion from TerraForm Labs, a digital asset firm that Do Kwon co-founded, as reported by Bloomberg.
It is a component of the allegations of substantial losses that Three Arrows incurred during the collapse of TerraForm’s TerraUSD and Luna tokens in May 2022.
Court documents purport to indicate that the defendants inflated the prices of TerraUSD and Luna in order to persuade Three Arrows to make a substantial investment. If the tokens were to collapse, it would not only result in the complete loss of the investment from Three Arrows but also cause significant losses in other holdings.
Three Arrows Capital, which was once a prominent participant in the crypto hedge fund industry, collapsed shortly after the fall of TerraUSD and Luna, which was yet another stablecoin that profoundly affected significant crypto businesses. A British Virgin Islands court ordered the assignment of liquidators from consultancy Teneo to recover the hedge fund’s assets in order to satisfy outstanding debts as a consequence of the collapse.
The liquidators of Three Arrows have expanded their efforts to recover funds from the hedge fund’s founders, Su Zhu and Kyle Davies, as well as other affiliated entities. To mitigate the impact on the creditors of Three Arrows, the forthcoming legal proceedings will be implemented.
Back in April, a jury determined that TerraForm and Kwon were responsible for fraud in the United States lawsuit concerning Luna’s collapse. TerraForm submitted a Chapter 11 bankruptcy petition in January and is currently in the process of liquidation. In addition to being accused in the United States and South Korea, Kwon was apprehended in Montenegro last year. A Montenegrin court recently determined that he is eligible for extradition to South Korea. The recovery from TerraForm is still uncertain, as liquidation processes are currently in progress.
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