Share this article
Terraform Labs, Founder, VC Firms Sued on Claims That Investors Were Misled
The plaintiff alleges the so-called "Terra Tokens" resembled securities, regardless of investor perception.
By Nikhilesh De
Updated May 11, 2023, 5:44 p.m. Published Jun 18, 2022, 2:24 p.m.
An Illinois resident sued Terraform Labs, its founder Do Kwon and several VC firms that make up the Luna Foundation Guard (LFG) on claims the defendants violated federal securities laws and misled investors.
The plaintiff, Nick Patterson, filed a lawsuit seeking class action status on Friday in the Northern District of California in the hopes of recouping losses and any injunctive or punitive fees from a jury trial.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Patterson alleged both California state and federal law violations against the defendants.
The plaintiff said the "Terra Tokens," (a catchall term for both UST, LUNA and other tokens in the ecosystem) resembled securities, even if investors may not have been able to recognize them as such, pointing to how Terraform Labs and the VCs behind the LFG marketed the project.
LUNA and UST both collapsed in dramatic fashion last month after the stablecoin lost its peg. An attempt to relaunch LUNA has so far failed to bring investors back to the project.
The filing, which includes screenshots from Twitter, heavily quotes Kwon and his dismissive reactions to other parties who claimed UST faced a depegging risk.
In addition to Terraform Labs and Do Kwon, the suit lists as defendants Definance Capital/ Definance Technologies Oy, GSR/GSR Markets Limited, Jump Crypto, Jump Trading LLC, Nicholas Platias, Republic Capital, Republic Maximal LLC, Three Arrows Capital, Pte. Ltd. and Tribe Capital.
Three Arrows Capital is facing financial woes of its own.
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
JPMorgan Pushes Deeper Into Tokenization With Galaxy's Debt Issuance on Solana
Galaxy’s onchain debt deal, where JP Morgan acted as arranger, was settled in USDC stablecoin and backed by Coinbase and Franklin Templeton.
What to know:
- J.P. Morgan arranged Galaxy Digital’s commercial paper issuance on the Solana blockchain, one of the first of its kind in the U.S.
- Coinbase and Franklin Templeton bought the short-term debt instrument, settled in USDC
- Tokenization of real-world assets is gaining traction, with projections suggesting the market could reach $18.9 trillion by 2033.
Top Stories
