JONATHAN KUPETZ & 9 Ors v TERRAFORM LABS PTE. LTD. & 2 Ors

Facts

The appellants were investors who bought TerraUSD (UST), an algorithmic stablecoin linked to the LUNA token, which lost its peg to the US dollar from 7 May 2022 and collapsed. In SIC/OA 3/2024, a representative action in the Singapore International Commercial Court involving 366 claimants, they sued Terraform Labs Pte Ltd, its co-founder Kwon Do Hyeong and Luna Foundation Guard Ltd. Before trial the defendants conceded that five representations, including that UST was stable by design and would always return to its peg, were fraudulent. The trial was split, with a first tranche deciding common issues and the full claims of ten representative claimants.

The judge dismissed three representative claims for want of reliance and awarded the other seven part of their claims, totalling US$451,451.66. He valued remaining UST holdings as if sold at 12.01am UTC on 12 May 2022, about 14 hours after Mr Kwon's tweets of 11 May 2022, at that day's opening price of US$0.8011, and ordered each side to bear its own costs. The investors appealed on damages in CA/CAS 2/2025 and on costs in CA/CAS 4/2025, and applied in CA/SUM 29/2025 to admit further evidence.

Issues

1. Whether further evidence on locked tokens, market liquidity, a deleted tweet and Mr Kwon's later guilty plea should be admitted on appeal
2. Whether the defendants' late plea of failure to mitigate unfairly prejudiced the investors, and how fixing a cut-off date relates to mitigation in deceit
3. Whether the cut-off date could be fixed for all claimants on a representative basis, and whether the cut-off price of US$0.8011 was correct
4. Whether the judge erred in ordering each party to bear its own costs of the first tranche

Holding

The Court of Appeal dismissed the application to adduce further evidence and dismissed the damages appeal except that it revised the cut-off price to US$0.60485 and corrected one claimant's award to include a second trading account. The awards to four representative appellants were increased accordingly. It allowed the costs appeal in part, awarding the investors 20% of their claimed costs and disbursements for the first tranche, payable by the respondents jointly and severally. The cut-off findings bind only the representative appellants, and represented claimants may lead individual evidence in the next tranche. The related applications concerning release of money paid into court were dismissed.

Reasoning

The court explained that damages in deceit restore the claimant to the position as if the transaction had not occurred, which requires valuing what was received at a cut-off date. That date starts when the misrepresentation stops operating, usually on discovery of the fraud, unless the claimant is locked into the asset. This is a matter of causation the claimant must prove; mitigation, on which the defendant bears the burden, arises only afterwards. The judge's cut-off therefore did not depend on the late mitigation amendment.

The further evidence was refused. The judge had raised the cut-off question early in the trial and the defendants had put forward their proposed time, so the investors had a fair chance to lead evidence on locked tokens and liquidity but did not. The deleted tweet was available and immaterial, and the guilty plea admissions did not bear on how the 11 May 2022 tweets would have been understood.

Common findings, such as how a reasonable reader would understand those tweets, could be made on a representative basis, and the judge was entitled to find that a reasonable investor would by then have seen UST was not stable. But when each claimant actually stopped relying on the representations, or was unable to sell, depends on individual evidence. On price, a single quote at the exact cut-off time ignored volatility and the effect of mass selling, so the court adopted the defendants' own trial figure, the average of the opening and closing prices on 12 May 2022, doing the best it could on the evidence. On costs, the investors had obtained a substantial money judgment and were the successful party, but failed on most live issues, so a large reduction was warranted.

From the judgment