Three Arrows Capital (3AC), the once-mighty crypto hedge fund that spectacularly collapsed in 2022, is taking another shot at recovering its losses. Liquidators for the defunct fund have filed a lawsuit against TerraForm Labs, the company behind the now-defunct TerraUSD and LUNA tokens, seeking a staggering $1.3 billion in damages.
The legal action is the latest chapter in a complex saga that has rocked the cryptocurrency industry. At the heart of the matter is the allegation that TerraForm manipulated the market for LUNA and TerraUSD, artificially inflating their prices before the catastrophic crash that wiped out billions of dollars in investor value. 3AC was one of the biggest casualties of this collapse.
“TerraForm induced Three Arrows to purchase Luna and TerraUSD by manipulating the market for these tokens,” the liquidators claimed in a court document. The fund once held nearly half a billion dollars worth of LUNA, which evaporated almost entirely in the aftermath of the crash.
The lawsuit against TerraForm is part of a broader effort by 3AC’s liquidators to recover funds for creditors. The fund’s co-founders, Su Zhu and Kyle Davies, are also facing legal actions. However, the road to recovery is fraught with challenges.
Also Read: Terra Luna Classic Community Approves Tax2Gas Upgrade: Can LUNC Revive?
Do Kwon, the enigmatic figure behind TerraForm and LUNA, has been at the center of a global manhunt following the crash. After being arrested in Montenegro, he is currently fighting extradition to South Korea. The latest twist in this drama came on August 8 when a Montenegrin court postponed the extradition process.
With the legal battle against TerraForm unfolding and the uncertain fate of Do Kwon, the full extent of 3AC’s potential recovery remains unclear. The case is being closely watched by the crypto community as it could set important precedents for future market manipulation claims.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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