3AC Liquidators Want $1.3B From TerraForm Labs Over 2022 Luna Crash

Liquidators acting on behalf of Three Arrows Capital (3AC) are looking to recover at least $1.3billion from TerraForm Labs.

Court papers show that TerraForm Labs allegedly induced 3AC to purchase Terra (LUNA) by manipulating the market for these tokens, causing their prices to be artificially inflated

LUNA Craters to US$0.12 as BlackRock, Citadel Deny Shorting Involvement

As Terra scrambles to save its stablecoin’s peg, its token has cratered. And Crypto Twitter has also blamed tradfin giants for accelerating the downtrend.

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Once an industry darling, 3AC filed for Chapter 15 bankruptcy in 2022, a move that protects its US assets while a liquidation is carried out in the British Virgin Islands, where the company is incorporated.

[UPDATED] 3AC Enters Liquidation – What Happens Next?

The crypto hedge fund has been in a distressed state since last month’s LUNA fallout, but the inevitable has come to pass - 3AC is done.

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Earlier in June, Terraform Labs and its co-founder Do Kwon reached a settlement agreement with the U.S. Securities and Exchange Commission (SEC) for a staggering $4.5 billion.

This settlement comes after the SEC filed a civil lawsuit against Terraform Labs and Do Kwon in May 2022, alleging they had defrauded investors with their TerraUSD (UST) stablecoin and Luna token.

Terraform Labs, Do Kwon Settle SEC Charges for $4.5 Billion

The Terraform Labs co-founder previously argued that a maximum penalty of $1 million is “far more appropriate” than the SEC’s original $5.3 billion request.

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By the end of April 2022, 3AC had approximately $462 million in Luna, but saw its value drop significantly to just over $2,700 following the crash, as stated in court documents.

However, it is still unknown how much money will be recovered from Terra Labs at this stage as the case is still ongoing in the US Bankruptcy Court for the District of Delaware. It might take some time before market participants can finally put the whole saga behind them.