Investors who had filed a class action lawsuit alleging fraud against Terraform Labs and its co-founder Do Kwon have abandoned their claim. Lawyers for plaintiff Nick Patterson, who brought the complaint on behalf of investors, filed a notice of voluntary dismissal only against Terraform and Kwon on September 28 in the United States District Court for the Northern District of California. The grounds for dismissing the lawsuit without prejudice were not stated in the notice specifically.
In June 2022, following the demise of Terraform Labs, which many believed to be the catalyst for a significant crypto market crash, Patterson’s legal team filed the complaint. Since then, Kwon and the business have come under fire from numerous agencies across the globe for their suspected involvement in a plot to swindle investors. Kwon and Terra were named in a civil lawsuit by the U.S. Securities and Exchange Commission in February for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.” Kwon was detained by Montenegrin authorities in March and later given a 4-month prison term for using fraudulent travel credentials. It was unknown at the time of publishing whether he would be freed in Montenegro or would be subject to extradition to the United States or South Korea.