The story began in May 2022 when the Terra network observed a $40 billion collapse in its algorithmic stablecoin terraUSD (UST) and companion token, LUNA, despite guarantees from co-founder Do Kwon. Three Arrows Capital declared bankruptcy by July, claiming irreversible damages resulting from Terra’s fall from grace.

According to court documents based on Bloomberg, this case claims TerraForm manipulated the market for Three Arrows Capital to buy Luna and TerraUSD, therefore artificially inflating the price of the assets before they were wiped off.

In January 2024, Terraform filed for bankruptcy in Delaware, United States. On civil fraud allegations presented before the U.S. Securities and Exchange Commission (SEC) in April 2024, a Manhattan jury found Do Kwon guilty.

Do Kwon stays in Montenegro, where he has been since his March 2023 arrest for trying to use fictitious travel documentation. He is waiting on Montenegro’s government to decide where he should be extradited. Authorities from both South Korea and the United States have been looking for his extradition.

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