Terra and Celsius in the same boat!
The crypto market crash which hit the market in May, certainly caused a lot of dents in the companies dealing with cryptocurrencies and made a dent in the minds of the investors. Two major companies that were affected severely by the market crash are Terraform Labs and Celsius.
Terraform Labs was among the most hit crypto institutions in the market. The stable coin of the firm, Terra USD (UST) and its sister token Luna got de pegged under $1, loosing 99% of the value. One of the main reasons for market’s crash to get prolonged for so long is the debacle that Terra faced.
Celsius, a crypto lending platform was also hit massively by the market. The platform also had a lot of victims as the company couldn’t handle the heat from the market. The company also went on to file chapter 11 of Bankruptcy, leaving the investors mistreated. According to reports, the company owes around $4.7 billion to its creditors and doesn’t have enough assets to pay them off.
If we observe the situations of both the companies, both are more or less in the same boat and it is evident that, their boat is sinking fast. In the recent development of news, a new lawsuit has been filed against both the companies.
Lawsuit on Terra and Celsius.
A class action lawsuit has been filed at the U.S. District Court for the Northern District of California against Terraform Labs, CEO Do Kwon, cryptocurrency lending firm Celsius, and other relevant parties by Braga Eagel & Squire, P.C., a well-known stockholder rights law firm. The lawsuit was filed on the behalf of all the investors who held any kind of Terra’s tokens such as Luna, UST KRT and many more.
Allegations against Terra and Celsius.
The complaint claims that, the Terraform Lab’s employees including Do Kwon, knowingly carried out a conspiracy to deceive retail investors into buying Terra tokens at artificially inflated prices, as well as by endorsing deceptive statements, making false representations, and omitting important information.
Similar to the TFL case, the action against Celsius asserts that the defendants misled investors, made statements that were knowingly false or deceptive, omitted crucial information, and sold unregistered securities and financial products, all in violation of the Exchange Act.
Writer’s Analysis:
In the current market situation, lawsuits on crypto institutions adds more misery. It is certain that Terra is in deep trouble as South Korean government is also scrutinizing the activities of the company, while Celsius looks clue less on how to repay the creditors.