- Liquidators seek $1.3 billion from TerraForm Labs.
- The amount aims to compensate the hedge fund from 2022 losses after TerraUSD and Luna Collapse.
Three Arrow liquidators seek $1.3b from TerraForm
As a seasoned researcher who has witnessed the rise and fall of numerous digital assets, I can’t help but feel a sense of deja vu when reading about the latest developments with TerraForm Labs and Three Arrows Capital. It seems that the crypto world is once again learning the hard way about the risks associated with unregulated markets and overly ambitious projects.
Representatives from the collapsed cryptocurrency hedge fund, Three Arrows Capital, are attempting to recover approximately $1.3 billion by filing claims against TerraForm Labs.
As a financial analyst, I can attest that the current predicament stemming from our organization stems directly from the substantial losses we incurred following the downfall of TerraUSD and Luna, two digital assets closely associated with Terraform Labs.
According to a recent court document, it is claimed that TerraForm artificially influenced the trading of TerraUSD and Luna. This alleged price and market manipulation led Three Arrows to significantly invest in these tokens.
The collapse of those digital tokens severely impacted Three Arrows’ investments, leading to significant losses across their other assets. Following the downfall of TerraUSD and Luna, Three Arrows Capital, as well as numerous other crypto ventures linked to these tokens, suffered a similar fate.
Consequently, Teneo’s liquidators were assigned by a court in the British Virgin Islands to retrieve assets and compensate the creditors of the hedge fund.
For quite some time now, these liquidators have been actively chasing down legal actions concerning Su Zhu, Kyle Davies, and their related businesses.
Collapse of TerraUSD and Luna
Over a span of four years, Terra network and its head, Do Kwon, gained considerable influence within the cryptocurrency sector. Regrettably, their journey culminated in disaster. The Luna cryptocurrency network experienced a catastrophic collapse, marking what is now considered the largest crypto market crash to date. Approximately $60 billion was erased from the industry as a result.
As a crypto investor, I was left reeling by the recent collapse, which sent shockwaves through our community. The downfall of Luna and UST was particularly disconcerting, given that UST had previously maintained a peg to the dollar as a stablecoin. However, it seems that this stability was an illusion, as TerraUSD, unlike other reliable stablecoins such as Tether’s USDT, was not backed by cash, treasuries, or other traditional assets. This lack of support made its collapse all the more dramatic and serves as a reminder of the risks inherent in the crypto market.
Previously this year, a U.S. court determined that TerraForm Labs and Kwon were guilty of fraud regarding the crash of Luna. By the close of April 2022, Three Arrows Capital held approximately $462 million in Luna, which had plummeted in value to around $2700.
Over the given timeframe, I’ve witnessed a staggering loss of around $858 million in my crypto holdings that were linked to Three Arrows, which is quite a blow. On top of this, Terraform Labs, the company behind one of the assets, has filed for Chapter 11 bankruptcy and is now readying itself for liquidation – a move that’s causing ripples across the crypto market.
Impact on crypto community
Significantly, significant failures in high-profile projects can have a profound effect on investors, brokers, and the cryptocurrency sector as a whole. These collapses result in substantial losses for numerous investors, negatively impacting their finances and causing some to exit the crypto market.
Similarly, the collapse within the industry serves as an unwelcome progression, prompting more attention from regulators. These losses often lead to intensified oversight and stricter regulations being imposed on the cryptocurrency market.
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2024-08-13 16:08