‘LUNAtics’ vie for ‘Biggest Loser’ Title in TerraForm Labs’ LUNA Fiasco
On June 17, 2022, a putative class action was filed in the United States District Court of the Northern District of California against TerraForm Labs Pte. Ltd (TFL), Jump Crypto, Jump Trading LLC, Republic Capital, Republic Maximal LLC, Tribe Capital, DeFinance Capital, DeFinance Technologies, GSR/GSR Market Limited, Three Arrows Capital Pte. Ltd, TFL’s co-founder, and CEO Do Kwon, and Head of Research, Nicholas Platias. Now, five different individuals each claim to be the biggest financial loser and should lead the class.
The complaint alleges that the defendants violated a provision of the Exchange Act by carrying out a plan, scheme, and course of conduct that TFL intended to and did deceive retail investors and thereby caused them to purchase Terra Tokens at artificially inflated prices; endorsed false statements they knew or recklessly should have known were materially misleading, and made untrue statements of material fact and omitted to state material facts necessary to make the statements not misleading.
The complaint claims that by aiding and abetting TFL’s failure to register the Terra Tokens, both TFL and the individual Defendants violated Securities Act requirements. In addition, non-security allegations are made in the lawsuit, including civil conspiracy and aiding and abetting claims under common law in California. Finally, the complaint claims that by managing an organization’s affairs through a pattern of racketeering behavior, all Defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO). The complaint also claims that the defendants violated California common law rules by holding Terra Tokens at an inflated value that legitimately belonged to the plaintiff and other class members.
Terraform Labs operates the Terra blockchain and its related protocol — the “Terra ecosystem” — and develops, markets, and sells financial products within that ecosystem. Among those financial products are the “Terra Tokens” — which include the “stablecoin” UST, the token LUNA, various “mirrored” assets, and bonded tokens—and related protocols that are designed to facilitate the sale of the Terra Tokens.
TFL touted the stability of UST as an “algorithmic” stablecoin — meaning a digital asset intended to maintain its peg to one U.S. dollar through its relationship to a secondary asset — here, the Terra ecosystem’s LUNA token. It also created and touted the sustainability of the “Anchor Protocol,” which is a high-yield savings account in which investors “stake” UST in exchange for a guaranteed 20% APY interest rate.
In May 2022, the price of UST and LUNA collapsed by approximately 91% and 99.7%, respectively, when it was revealed that those two instruments were unstable and unsustainable, contrary to the misrepresentations and omissions of the Defendants.
Law firms emphasized that before the case’s August 19, 2022 deadline, Terra ecosystem token holders must appoint a lead plaintiff. In a class-action lawsuit, the lead plaintiff, often referred to as the class representative, is the individual who speaks on behalf of all those who experienced comparable damages. The lead plaintiff selection process begins when the first plaintiff files an action and publicizes its pendency, thereby commencing the sixty-day window to seek appointment as lead plaintiff.
Currently, there are five individuals requesting the court to appoint them as the lead plaintiff and approve their selection of lead counsel.
1: Josh Golder, a Miami Florida entrepreneur. He is a relatively experienced crypto investor and began investing in the sector two years ago. He purchased over $29,239,250.15 in UST, LUNA, and WLUNA, investments on which he has suffered losses of approximately $28,787,815.13 including fees.
According to Golder, he is the “most adequate” plaintiff because, to his knowledge, he has the largest financial interest in this matter and because he satisfies the typicality and adequacy requirements set forth in Federal Rule of Civil Procedure 23.
Golder has selected Roche Freedman and DNF as his counsel and represents that Roche Freedman and DNF are fully capable of litigating this case.
2: Nick Patterson, the current lead plaintiff, claimed that he is the class member with the largest financial interest in the relief sought in this litigation. According to Patterson, he purchased an estimated $26,774.89 worth of LUNA and UST using U.S. dollars.
He used these purchases of LUNA and UST to swap into the other Terra tokens that are the subject of the complaint, including aUST, ANC-UST_LP, XDEFI, MINE, mVIXY, bLUNA, WHALE, ASTRO, mETH, mBTC, ANC, bETH, kUST, wETH, Apollo, and MIR.
Patterson has selected the law firm of Scott+Scott to represent the Class.
3: José Luis Villasenin suffered losses of approximately $192,000 from his purchases of LUNA cryptocurrency tokens between May 20, 2021, and May 25, 2022. Villasenin claims that this loss represents the largest financial interest of any investor seeking to be appointed lead plaintiff. In addition, Villasenin said that his Certification and Declaration demonstrate his awareness of the fiduciary duties associated with serving as a lead plaintiff.
Villasenin has selected KSF to serve as Lead Counsel for the putative class, a firm with substantial expertise in the prosecution of securities class actions in federal and state courts across the country.
4: Michael Tobias invested $452,991 in UST on 452,991 UST tokens, which he continues to hold, and lost approximately $441,062 under the Exchange Act in connection with his transactions of Terra Tokens. Tobias claimed that he satisfies the largest financial interest requirement to be appointed as Lead Plaintiff for the Class.
Tobias has selected Rosen Law as Lead Counsel. The firm has been actively researching the Class’ and the Movant’s claims — reviewing publicly available financial and other documents and gathering information in support of the claims against the Defendants.
5: Shing Yiu Ng suffered a substantial loss of approximately $3,559,997.02. According to Ng, he filed a timely motion to be appointed lead plaintiff, holds the largest financial interest in the relief sought by the Class, and satisfies the typicality and adequacy requirements of Rule 23.
Ng has selected and retained BES as the proposed Lead Counsel for the Class.
BlockTribune believes that $30,000,000 is greater than $30,000. Stay tuned for the lead plaintiff selection!
Please contact BlockTribune for access to a copy of these filings.
