A group of investors who had initiated a class-action lawsuit against Terraform Labs and its co-founder, Do Kwon, on charges of fraud, have decided to withdraw their case.
In a filing dated September 28th, submitted to the United States District Court for the Northern District of California, legal representatives for Nick Patterson, the plaintiff who had initially brought the lawsuit on behalf of the investors, submitted a notice of voluntary dismissal solely against Terraform and Kwon. The notice did not provide explicit reasons for this dismissal, which was done without prejudice.
“The [Terraform Labs] Defendants have neither answered the complaint […] nor filed motions for summary judgment,” said the filing. “Because the Court has not certified the proposed class for any purpose in this case and this dismissal is without prejudice, it will not bind members of the proposed class.”
The lawsuit, originally filed by Patterson’s legal team in June 2022, had arisen in the aftermath of the collapse of Terraform Labs, an event that was widely linked to a significant downturn in the cryptocurrency market. Kwon and his company had subsequently come under scrutiny from regulatory authorities around the world due to their alleged involvement in a scheme aimed at defrauding investors.
In February, the U.S. Securities and Exchange Commission (SEC) filed a civil lawsuit against Kwon and Terra, accusing them of orchestrating a multi-billion dollar crypto asset securities fraud. In March, Kwon faced legal trouble when he was arrested in Montenegro for the use of false travel documents. As of the time of this publication, it remained uncertain whether he would be released in Montenegro or potentially face extradition to the United States or South Korea.