Three Arrows Capital Liquidators Sue Terraform Labs for $1.3 Billion

By: Eliza Bennet

Three Arrows Capital (3AC) liquidators have filed a substantial claim against Terraform Labs amounting to $1.3 billion, as reported by Bloomberg. The claim reportedly arises from losses suffered by the defunct cryptocurrency hedge fund following the crash of 2022. Terraform Labs is accused of manipulating the open market for LUNA and UST, which allegedly resulted in an artificial inflation of the asset prices.

According to the allegations, Terraform Labs engaged in practices designed to inflate the prices of their crypto assets, LUNA and UST, leading to significant financial damage. This scheme, as claimed by the liquidators, manipulated market dynamics and led to a falsely elevated valuation of the cryptocurrencies in question.

Three Arrows Capital, once a prominent hedge fund known for its substantial investments in cryptocurrency, faced a dramatic downfall amid the 2022 market crash. The claim against Terraform Labs highlights the interlinked markets of the two entities and their significant stakes, which cascaded into massive financial losses.

This lawsuit underscores the ongoing scrutiny within the cryptocurrency sector concerning market manipulation and the catastrophic effects it can have on investors and stakeholders. As the case progresses, it will likely draw attention to the practices within these markets and may set a significant precedent for future regulatory actions in the digital asset space.