Over 350 investors have filed a class action lawsuit against Do Kwon and other Terraform Labs

Over 350 investors have filed a class action lawsuit against Do Kwon and other Terraform Labs participants.

A class action lawsuit for $57 million has been filed against Do Kwon and other TerraUSD project participants by angry investors.

Another legal dispute between Do Kwon and their accomplices could result in severe civil penalties.

The Wall Street Journal reports that Kwon is facing a class action lawsuit on behalf of investors who lost $57 million as a result of TerraUSD stablecoin’s demise. These investors are now seeking aggravated damages in addition to their lost money.

According to the class action lawsuit, Kwon and others falsely projected the stability of TerraUSD’s pricing. The lawsuit also noted that investors “believed that [TerraUSD] would be a token that was stable by design [and] whose price would always be pegged to the US Dollar.”

Investors also thought that the stablecoin would provide “excellent APY returns” when staked in Terraform Labs’ lending and borrowing platform, Anchor Protocol.

The TerraUSD stablecoin’s price mechanism, however, broke down in May, leading the asset to lose its peg to the US dollar and almost all of its market value.

According to the lawsuit, despite assertions to the contrary, TerraUSD was not “stable by design,” was unable to keep its price peg, and was unable to make up for losses.

It further claims that after the project’s swap mechanism was stopped in May, token holders could not exchange TerraUSD for an equivalent number of Luna.

Finally, it asserts that Anchor did not deliver the promised sustainable 20% yield and was not “principal assured.”