Legal Ruling in Singapore
A significant legal ruling has emerged from Singapore, where a court has mandated that Terraform Labs and its co-founder Do Kwon pay over $3 million in damages to a group of 40 investors. This decision comes in the wake of the collapse of the TerraUSD (UST) stablecoin, which occurred in May 2022 due to circumstances surrounding its algorithmic structure. The Singapore International Commercial Court (SICC) issued this judgment on June 29, determining the liability of the defendants for making misleading statements about the stability and reliability of UST.
Background of the Case
This judgment represents the second phase of a larger legal action initiated by a collective of 275 investors seeking reparations for their financial losses. In a previous ruling from 2025, the court had already identified Terraform Labs and Kwon as culpable for actionable fraudulent representations. Notably, this latest ruling has taken into account insights from the Singapore Court of Appeal, which in March 2026 established a revised method for calculating damages, adjusting the valuation of UST to approximately $0.60485.
Findings of the Court
The SICC’s findings reveal that Terraform and Kwon misrepresented UST as a safe and reliable stablecoin designed to maintain a one-to-one peg to the US dollar, relying on algorithms, reserves, and an LUNA-based arbitrage system. However, these representations were found to be either false or made with a blatant disregard for their truthfulness, appearing across various platforms including Terraform’s official website and public statements. Many investors acted upon these claims when acquiring UST or maintaining their holdings, resulting in significant financial losses after the stablecoin failed to retain its dollar peg.
The court calculated the damages based on reliance for investments made before May 12, 2022, deeming losses incurred afterwards too speculative for compensation.
Ongoing Legal Pressures
This ruling adds to the mounting legal pressures faced by Terraform Labs, which has already initiated Chapter 11 bankruptcy proceedings in the United States. The process of reconciling claims from creditors is currently in progress, and any potential recoveries for investors will largely hinge on outcomes from both the bankruptcy estate and additional ongoing legal battles.
Earlier this year, the appointed administrator for Terraform’s bankruptcy also pursued legal action against market maker Jane Street, accusing the firm of using insider information to manipulate markets for profit during the collapse of the Terra ecosystem. Jane Street has refuted these allegations, suggesting that the lawsuit represents an attempt to siphon funds, asserting that investor losses stemmed from the misconduct of Terraform’s executives.
Implications for Do Kwon
For Do Kwon, who has been sentenced to 15 years in prison in the United States after pleading guilty to fraud, the legal saga continues, including parallel proceedings in South Korea. The implications of the SICC’s decisions could resonate through future legal actions regarding cryptocurrency investments, as they shed light on the communication of risk to investors prior to substantial project failures.
As regulatory bodies worldwide intensify their efforts to establish stronger disclosure requirements for stablecoins and decentralized finance, this case stands as a critical reference point in the evolving landscape of digital assets.
