Albright Capital withdraws its lawsuit against Do Kwon and Terraform Labs

By: Mark Jessy

January 11, 2023 7:34 AM

US Dollar Terra (UST) was an algorithmic stablecoin created by Terraform Labs, however it lost its peg in May.

On January 9, Albright Capital filed a Notice of Voluntary Dismissal in U.S. District Court, indicating that it was withdrawing its action against Terraform Labs and its founder, Do Kwon. Until it was dropped, the complaint claimed that the corporation was running the stablecoin UST as a "Ponzi scheme," in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO").

Co-founder of Three Arrows Capital (3AC) Su Zhu announced the firing on Twitter, writing:

As previously reported, Zhu blamed the demise of UST for contributing to 3AC's insolvency. "Without prejudice" dismissal means the plaintiff can refile the action at a later date.

Terraform laboratories developed an algorithmic stablecoin called US Dollar Terra (UST). The LUNA cryptocurrency was used because it was the native currency on the Terra network. Each UST coin was supposed to be valued at $1 in the secondary market, and UST was backed by a dollar's worth of LUNA as collateral. Nonetheless, LUNA's value plummeted in May, leaving UST undercollateralized. Because of this, the value of UST plummeted to $0.02 per coin.

Multiple lawsuits have been filed against UST, saying that it is a fraud, and in September, South Korean authorities issued an arrest order for Kwon. That UST "amounted to a Ponzi scheme that was only supported by the demand for UST produced by Anchor's high yields" was the main claim in the case in question. The lawsuit was initially filed by the defendant, however the plaintiff has since dropped the case.