$1.3 billion: Trustees of Three Arrows Capital sue Terraform Labs

The trustees of Three Arrows Capital (3AC) are demanding $1.3 billion from Terraform Labs, the company behind Terra Luna.

According to Bloomberg claim the trustees of Three Arrows Capital $1.3 billion from Terraform Labs. Three Arrows Capital was one of the largest crypto-hedge funds that went bankrupt in 2022 during the Terraform crisis. At the time, Terra Luna's algorithmic stablecoin system collapsed, with Three Arrows Capital being a major investor.

The indictment alleges that Terraform induced the hedge fund to buy the tokens while manipulating the market and artificially raising the price. Terra Luna was a blockchain ecosystem that provided both the LUNA-token as the dollar stablecoin TerraUSD issued. Both coins collapsed in 2022, leading to the loss of billions in value in the market.

Founder Do Kwon stands trial for fraud and may be subject to South Korea extradited, where he could face up to 40 years in prison. U.S. regulators SEC and CFTC have been investigating 3AC's founders, accusing them of balance sheet fraud.