The liquidators of the collapsed crypto hedge fund, Three Arrows Capital (3AC), are pursuing a $1.3 billion claim against TerraForm Labs, a bankrupt digital assets company co-founded by Do Kwon.
This claim is tied to the losses 3AC suffered after the 2022 crash of TerraUSD and Luna tokens that were central to TerraForm’s operations.
According to Yahoo Finance, 3AC claims TerraForm Labs manipulated the market to inflate the value of TerraUSD and Luna, which made 3AC to invest heavily in these tokens. In January 2022, 3AC bought $190 million worth of Luna as part of a $1 billion investment deal with other companies.
However, a few months later, the value of TerraUSD and Luna crashed, causing 3AC’s Luna holdings, which were worth $462 million at the end of April 2022, to drop to just $2,700 by mid-May. The hedge fund’s other digital assets also lost about $858 million in value during this time.
Three Arrows Capital, once a major player in the crypto industry, collapsed shortly after the TerraUSD and Luna crash, along with several other large crypto companies.
The British Virgin Islands court appointed liquidators from the consulting firm Teneo to manage 3AC’s assets and recover money for its creditors. The $1.3 billion claim against TerraForm is part of these efforts.
But TerraForm Labs is already facing legal challenges. Earlier this year, a U.S. court found TerraForm and Do Kwon guilty of fraud related to the Luna crash. The company filed for bankruptcy in January and is now preparing to liquidate.
Do Kwon, who was arrested in Montenegro last year, is facing possible extradition to South Korea and charges in both the U.S. and his home country.
However, It is still unclear how much of the $1.3 billion claim 3AC will be able to recover from TerraForm Labs.
