Singapore court raises damages payout for investors burned by Do Kwon’s Terraform collapse

Source: Business Times
Article Date: 13 Mar 2026
Author: Tessa Oh

But it upholds ruling that those who held TerraUSD past May 12, 2022, were speculating and not relying on misrepresentations.

The Court of Appeal has increased the damages awarded to a group of investors who lost money in the 2022 collapse of algorithmic stablecoin TerraUSD (UST), ruling that the lower court had used an unrealistic price to value their holdings at the point of collapse.

But the court upheld the lower court’s ruling that the investors in this claim who continued to hold UST after May 12, 2022, were speculating and cannot claim further losses from Terraform Labs and its co-founder Kwon Do-hyeong, more commonly known as Do Kwon.

The judgment, issued on Mar 6, arises from the first representative action heard before the Singapore International Commercial Court (SICC).

Representative action is a mechanism similar to a class action lawsuit, where a small group of named claimants sue on behalf of a larger group with a common interest.

The collapse of UST and its sister cryptocurrency Luna – one of the largest in the market then – in May 2022 wiped out some US$40 billion in market value and triggered a broader crisis across cryptocurrency markets.

The investors who appealed have described themselves as “lunatics”, after the Luna token.

Kwon, who went on the run after the crash, was later arrested in Montenegro and extradited to the US, where he pleaded guilty to orchestrating a scheme to defraud investors in Singapore-based Terraform’s cryptocurrencies. He was sentenced to 15 years’ jail in December 2025.

Before the SICC trial began, Terraform and Kwon conceded that five of the seven representations they had made about UST’s stability were fraudulent, narrowing the dispute to whether investors had actually relied on those misrepresentations and how their losses should be calculated.

Damages revised upwards

In its judgment, the Court of Appeal revised the “cut-off price” – the notional value at which investors’ remaining UST holdings are deemed to have been sold at the point the fraud became apparent – from US$0.8011 to US$0.60485 per token.

The lower figure represents the average of UST’s opening and closing prices on May 12, 2022, and was the figure that Terraform’s own lawyers had proposed.

The court found the original price of US$0.8011, which reflected UST’s opening price on that date, to be “somewhat arbitrary or unrealistic”.

On that day, UST was trading with extreme volatility – swinging between a high of US$0.829 and a low of US$0.3626 – and a simultaneous rush to sell by hundreds of investors would have depressed market prices significantly below the opening level.

As a result, damages for several of the 10 “representative claimants” – a subset chosen to stand in for the broader group of 366 investors – were revised upwards.

The largest beneficiary was Phillip Robert Epstein, whose award rose to US$561,698.33 from US$358,099.68. The total damages for all 10 representative claimants increased to US$681,605.71 from US$451,451.66, representing about 8.4 per cent of the US$8.1 million they collectively claimed.

Three of the 10 representative claimants received nothing, as the court found they had not, in fact, relied on the false representations when buying or holding UST.

Speculating, not defrauded

Investors had also argued that the lower court was wrong to fix a single cut-off date for all claimants for when they should have known about the fraud.

Each person’s circumstances – including when they personally read Kwon’s May 11, 2022, tweets and whether they were able to sell their tokens – should have been assessed individually, they said.

The court disagreed. Read fairly, Kwon’s tweets would have signalled to any reasonable investor that UST’s peg to the US dollar was not going to be restored, it ruled. A 14-hour grace period was built in to allow investors time to act on that information, placing the cut-off at May 12, 2022, at 12.01 am coordinated universal time.

Investors also tried to introduce fresh evidence on appeal to show that some of them could not have sold their coins in time, including testimony that their UST had been locked in fixed-term savings products on platforms such as Gemini Earn and Binance Earn.

The court refused to admit these, arguing that the evidence had existed during the trial but the investors had simply chosen not to raise it then.

The court did, however, draw a distinction for the 356 investors whose claims have yet to be heard. Unlike the 10 representative claimants, they are not bound by the May 12 cut-off date, and may still argue in the next tranche of the trial that their individual circumstances justify a later one.

The judgment was delivered by Justice Steven Chong on behalf of a three-judge panel comprising Justice Belinda Ang and Beverley McLachlin, former chief justice of Canada.

The investors were represented by a team of lawyers from Drew & Napier, led by lead counsel Mahesh Rai.

Terraform and Luna Foundation Guard were represented by Senior Counsel Tan Chee Meng and lawyers from WongPartnership, while Kwon was represented by Keith Han and lawyers from Oon & Bazul.