TerraForm Labs, the mastermind behind the controversial TerraUSD and LUNA coins, is now said to have been the target of a malicious attack. Three Arrows Files $1.3 Billion Lawsuit Capital (3AC) is trying to offset the damage caused by the catastrophic collapse of digital assets in May 2022.
Once a giant cryptocurrency hedge fund is now facing the consequences of its investments, and preparing to hold on to them. TerraForm is responsible for its financial problems.
3AC Liquidator Seeks $1.3 Billion From Terraform Labs
Teneo, the liquidator of collapsed cryptocurrency hedge fund Three Arrows Capital (3AC), is seeking more than $1.3 billion from Terraform Labs, according to Bloomberg. Terraform, co-founded by Du Quang, is responsible for the collapse of…
— Coinness Global (@CoinnessGL) August 13, 2024
The fall of the crypto giant
Three Arrows acquired $190 million worth of LUNA tokens in January of this year, and that appears to have been the beginning of its troubles. 3AC’s stake in LUNA had risen to $462 million by April 2022 as the market boomed.
But weeks later, the whole environment collapsed. Just one day after LUNA’s value dropped, 3AC shares were worth just $2,700.
The 3AC fallout has reverberated throughout the cryptocurrency market. Apart from that, many other companies have suffered huge losses, and a wave of bankruptcies has followed.
Shortly after the collapse, a court in the British Virgin Islands declared 3AC itself bankrupt, appointing liquidators from Teneo to manage its remaining assets. Now the once glorious reputation lies in tatters, and the hedge fund needs to recoup all the losses it has incurred.
Three Stocks: Legal Wars Ahead
3AC’s filing of a $1.3 billion lawsuit against TerraForm Labs is indeed a significant step toward recovering some of its lost wealth. Unfortunately, the outcome of this resulting legal dispute remains unclear. With its bankruptcy filing due in January 2024, TerraForm Labs is in a crisis of its own.
🚨Update: Du Quan’s extradition from Montenegro faces another delay. The saga with the Terra co-founder continues. pic.twitter.com/2DgP15Bs9l
– Pawel Laskarzewski (@PawelSynapse) August 8, 2024
Co-founder of the company, Do KwanHe has had a rough run-in with the law, including being arrested in Montenegro and possibly extradited to his native South Korea. He is also on trial in the United States for his role in the failure of the LUNA and TerraUSD projects.
broader implications
This fact raises the question: What is the future of Three Arrows and TerraForm Labs? Can 3AC recover a single cent of its losses or will it become embroiled in a lengthy lawsuit with a bankrupt company? Both sides of the case will find it extremely difficult due to the intricacies of crypto markets and bankruptcy law.
This is perhaps the heaviest blow the financial market has received so far, as the fallout from the Terra collapse has shaken not only Three Arrows and Terra Form Labs, but also investor confidence in cryptocurrencies. Many are wondering whether the market has bottomed out or if more pain lies ahead. Regulatory scrutiny has increased, and investors are more cautious than ever.
Featured image from Financial News London, chart from TradingView
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