Terraform Labs and its founder, Do Kwon, may be hit with a class-action lawsuit in Singapore after the High Court dismissed an attempt to have it thrown out, Business Times reported on Thursday.
Terraform lawyers tried to shift the action to an arbitration process, citing the website's terms of use, according to the Business Times. The lawyers claimed users had foregone the right to trial and to join a class-action suit. The court ruled otherwise.
"To our knowledge, this is the furthest a class-action suit has progressed in the world," Mahesh Rai, a director of Drew & Napier, which represents the claimants, said in an interview. "Now we are approaching discovery stage."
The suit was filed in September 2022 by Julian Moreno Beltran and Douglas Gan on behalf of 375 others, who claim they lost a combined $57 million.
The claimants are alleging fraudulent misrepresentation by Terraform Labs, Do Kwon and his co-founders in their promotion of the algorithmic stablecoin terraUSD (UST), which led them to purchase and stake the tokens and hold on to them as UST lost its peg to the U.S. dollar in May 2022 and plunged to less than $0.10.
Terraform also faces charges of fraud in the U.S. brought by the Securities and Exchange Commission, which alleges it was selling unregistered securities. In October, Terraform asked for this case to be dismissed on the grounds that the regulator had been unable to make its case.
The company did not immediately respond to CoinDesk's request for further comment.
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