As a seasoned financial analyst with a keen interest in the crypto industry, I find myself constantly amazed by the rollercoaster ride that is digital asset investing. The latest chapter in this captivating narrative involves the liquidators of Three Arrows Capital (3AC) seeking a staggering $1.3 billion from TerraForm Labs.
Creditors of the collapsed crypto investment firm Three Arrows Capital are said to be seeking a recovery of around $1.3 billion from TerraForm Labs.
Based on a Bloomberg report published on August 12th, the assertion arises due to Three Arrows Capital’s financial losses that occurred after the crash of TerraUSD stablecoin and its associated Luna token in 2022.
Creditors representing Three Arrows Capital, a collapsed crypto hedge fund, are trying to recover approximately $1.3 billion from TerraForm Labs due to losses incurred after the fall of TerraUSD and Luna tokens in 2022.
— Bloomberg Crypto (@crypto) August 12, 2024
According to the report, Teneo, who were appointed as 3AC’s court-recommended liquidators, have accused TerraForm of unfairly influencing the LUNA and UST market prices. They claim this manipulation caused these market values to rise artificially before they ultimately dropped sharply.
As a researcher, I’ve come across information from court filings, as reported by Bloomberg, suggesting that according to Teneo, following the alleged manipulation, Three Arrows Capital (3AC) heavily invested in two specific tokens. This decision, they claim, led to significant financial losses for 3AC. Beyond the direct losses from these failed tokens, Teneo alleges that the crash of Terra also negatively impacted other cryptocurrencies held by 3AC.
Initially, the company held a significant position in the cryptocurrency market, but following the collapse of TerraUSD and Luna, along with many other notable crypto companies, it unfortunately faced a downfall as well.
Apart from seeking recovery, Teneo is additionally targeting the return of funds from the co-founders of Three Arrows, specifically Su Zhu and Kyle Davies, along with some others.
Previously this year, Davies sat down for a detailed conversation with cryptocurrency journalist Laura Shin. During that talk, he expressed that he had no regrets concerning the bankruptcy of his firm.
In July 2022, a Singapore-based company named 3A sought bankruptcy protection due to unmet creditor demands following a significant market crash caused by the Terra collapse. A year prior, this company had an impressive $10 billion in cryptocurrency assets. However, by the time the company declared insolvency, its crypto holdings had dwindled down to approximately $3 billion.
3AC’s lawsuit against TerraForm Labs signifies another instance of legal troubles for the organization, stemming from the collapse of their cryptocurrencies. Previously, they agreed to a $4.47 billion settlement with the U.S. Securities and Exchange Commission following a verdict that found both the company and its founder, Do Kwon, accountable for the $60 billion market downturn.
Initially, the Securities and Exchange Commission (SEC) demanded a total fine of $5.3 billion from both Mr. Kwon and TerraForm. This amount included $4.7 billion in compensatory payments called disgorgement and an additional $520 million as civil penalties.
Currently, Do Kwon finds himself confined at home in Montenegro, anticipating extradition to either the United States or South Korea. In these countries, he is expected to serve significant jail terms due to his involvement in the collapse of Terra.
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2024-08-13 13:58