Late last week, five sets of counsel submitted briefs to the court overseeing their securities fraud cases against Terraform and other corporate and individual defendants concerning the Terra Token cryptocurrencies’ implosion in May. The briefs explain why respective counsel The Rosen Law Firm P.A., Bragar Eagel & Squire P.C., Kahn Swick & Foti LLP, Roche Freedman LLP and Dontzin Nagy & Fleissig LLP, and Scott+Scott Attorneys at Law LLP, should be appointed lead and their client lead plaintiff.
The suits argue that Terraform Labs Pte. Ltd., its leaders, and other related entities unlawfully promoted and sold digital Terra Tokens, including illegally unregistered securities called the UST and LUNA. As previously reported, not only were they unregistered with the Securities and Exchange Commission, but the defendants’ false statements and omissions led to investors’ purchase of the securities at an inflated price, the complaints say.
In May 2022, the price of UST and LUNA collapsed by approximately 91% and 99.7% when it came to light that those two instruments were unstable and unsustainable, contrary to what the defendants said. The complaints also finger the Luna Foundation Guard and its members, six venture capital groups that falsely promised to support and fund the Terra ecosystem in the event of high volatility troubling the UST/LUNA peg.
The plaintiff in the suit by Scott+Scott in June, brings claims for fraud and unregistered selling of securities under the Securities Exchange Act. The complaint also states causes of action under California common law including aiding and abetting liability against the Luna Foundation Guard for promoting the Terra Tokens, and conspiracy against all defendants for colluding to misleadingly promote the digital currencies.
The plaintiff represented by Scott+Scott is a “relatively experienced crypto investor,” according to the filing. Of the more than $29 million he invested in Terra Tokens, he lost more than $28 million, including fees, the motion says. It contends that not only is the plaintiff an adequate representative, but his representation is well-suited to serve as class counsel.
The five competing motions make similar allegations. The case is before Judge Beth Labson Freeman of the Northern District of California.