Singapore court has awarded more than $3 million in damages to 40 investors after finding Terraform Labs and co-founder Do Kwon liable for fraudulent misrepresentations tied to the 2022 TerraUSD collapse.
Summary
- Singapore court awarded more than $3 million to 40 investors after finding Terraform Labs and Do Kwon liable for fraudulent UST claims.
- The ruling followed earlier court findings and used a revised UST valuation that increased compensation for eligible claimants.
- Terraform’s legal troubles continue as bankruptcy proceedings and other lawsuits linked to the 2022 Terra collapse remain ongoing.
According to the June 29 judgment from the Singapore International Commercial Court (SICC), the award concludes the second tranche of a representative fraud action brought by 275 investors who sought compensation for losses suffered during the collapse of the TerraUSD (UST) algorithmic stablecoin in May 2022.
The latest ruling follows the court’s first-tranche decision in 2025, which found that Terraform Labs Pte Ltd and Do Kwon made actionable fraudulent representations. It also incorporates guidance from the Singapore Court of Appeal’s March 2026 decision, which revised the method for calculating damages by adopting a higher cut off value of about $0.60485 per UST.
Court finds investors relied on false UST claims
In its ruling, the SICC found that Terraform and Kwon falsely represented UST as a stablecoin capable of reliably maintaining its one dollar peg through its algorithm, reserves, and LUNA-based arbitrage mechanism. According to the court, those statements appeared on Terraform’s website, white papers, and public communications despite being false or made with reckless disregard for their accuracy.
The court held that some investors relied on those claims when buying or continuing to hold UST, leading to financial losses after the stablecoin lost its peg. Damages were therefore calculated on a reliance basis for holdings up to May 12, 2022, while losses after that date were treated as too speculative for compensation.
The Court of Appeal’s earlier decision to increase the UST cut off valuation resulted in higher compensation for eligible claimants than under the original damages model.
Bankruptcy cases continue as legal pressure grows
The Singapore judgment adds to Terraform’s expanding legal challenges after the company entered Chapter 11 bankruptcy proceedings in the United States. Claims reconciliation for creditors is ongoing, and any further recoveries for investors are expected to depend largely on distributions from the bankruptcy estate, alongside the outcome of other pending litigation.
Earlier this year, Terraform’s court-appointed bankruptcy administrator also sued market maker Jane Street, alleging the firm used confidential information and manipulated markets to profit during the Terra ecosystem’s collapse. Jane Street denied the allegations, calling the lawsuit an attempt to extract money and maintaining that Terra investor losses resulted from fraud committed by Terraform’s own management.
Do Kwon, who was sentenced to 15 years in prison after pleading guilty to fraud charges in the United States, also continues to face criminal proceedings in South Korea alongside other legal actions connected to the collapse.
According to the SICC ruling and related court proceedings, the case adds to a series of legal actions examining how crypto projects communicated risks to investors before major failures. The court’s findings may also influence future representative actions involving digital asset projects, while regulators in several jurisdictions continue to push for stronger disclosure standards for stablecoin and decentralised finance products.
