Three Arrows Capital liquidators have filed a lawsuit in pursuit of receiving $1.3 billion from TerraForm Labs. The failed crypto hedge fund states that the collapse of LUNA caused losses for the firm.
The 2022 crash of TerraUSD and LUNA affected numerous firms, of which Three Arrows Capital was one. According to a Bloomberg report, the liquidators mentioned in the court papers that TerraForm persuaded Three Arrows Capital to purchase Luna and TerraUSD.
TerraForm Labs was also accused of manipulating and inflating the prices of these tokens before they crashed. The liquidators stated that this crash wiped out their investment in these tokens as well as caused major losses.
Three Arrows Capital collapsed soon after Terra crash
Before the catastrophic collapse of the Terra ecosystem in 2022, Three Arrows Capital was a reputed crypto hedge fund. However, soon after the Terra crash, Three Arrows, along with other notable firms, were also brought to the ground.
Soon after the collapse, liquidators were appointed by a British Virgin Islands court to recover funds from its founders Su Zhu and Kyle Davies. This was in an effort to repay the creditors of the collapsed hedge fund.
According to the liquidators, Three Arrows purchased $190 million worth of Luna in early 2022, which was part of their $1 billion investment deal. However, a subsequent sell-off of the Terra ecosystem tokens after the crash wiped off the investment.
Three Arrows Capital had $462 million worth Luna in early 2022
Three Arrows had a Luna stash worth around $462 million at the end of April 2022. However, the same LUNA was worth just around $2,700 by May 14, as per the details from the court documents.
Additionally, the value of its other crypto holdings plunged by around $858 million. Nevertheless, it is uncertain at this time as to how much money can be recovered from TerraForm.
Do Kwon, the founder of the Terra ecosystem, was captured in Montenegro with a fake passport last year. Following the arrest, South Korea and the US have been debating whether to extradite Kwon to their respective countries.
Even though a Montenegro court stated that Kwon should be extradited to South Korea, this decision has been faced with multiple hurdles so far.
