Jonathan Kupetz and others v Terraform Labs Pte. Ltd. and others

This is the second tranche of a representative action in the Singapore International Commercial Court, SIC/OA 3/2024, brought by 275 investors who lost money when TerraUSD (UST), an algorithmic stablecoin, collapsed in May 2022. The defendants were Terraform Labs Pte Ltd, its co-founder Mr Kwon Do Hyeong, and Luna Foundation Guard Ltd. They had conceded that five representations were false and made fraudulently: that UST was stable by design and pegged to the US dollar; that its algorithm and arbitrage with the sister token LUNA would hold the peg in any market; that 1 UST could always be exchanged for one US dollar's worth of LUNA; that the Anchor protocol was a principal-guaranteed savings product; and that a reserve fund of USD 1 billion had been raised to defend the peg.

The first tranche, [2025] SGHC(I) 17, settled the common issues and decided the claims of ten representative claimants. The Court of Appeal, in [2026] SGCA(I) 1, revised the price at which unsold UST is treated as sold from US$0.8011 to US$0.60485 and held that each claimant could try to show that a different cut-off time should apply to them. This judgment decides the individual claims of 40 represented claimants who gave evidence in 2026. Mr Kwon did not appear at this hearing.

1. Whether witness statements drafted from a questionnaire, with much identical wording across claimants, should be admitted and given weight.
2. Whether each claimant owned the accounts used and actually relied on the conceded representations, including whether reading the Anchor terms of service or having investment expertise defeated reliance.
3. When each claimant's reliance ended, so that later losses were their own responsibility, and whether the default cut-off of 12.01am UTC on 12 May 2022 should move earlier or later for any of them.
4. How damages should be calculated for each claimant, and whether any claimant was entitled to aggravated damages.

Witness statements: the claimants' solicitors had used an open-ended questionnaire and then reused the same language across statements. The judge admitted the evidence because each claimant confirmed it as their own under cross-examination, but warned that statements must be in the witness's own words. Solicitors may organise and tidy a statement, but must not write it; under the courts' guide, AI tools may help with structure and form, but may not supply the evidence.

Reliance: the test is what each claimant actually believed, not what a reasonable investor would have understood. A party cannot use standard disclaimer terms to escape liability for its own fraud, and a claimant's expertise or awareness of some risk does not prevent reliance. The representation need only be one cause of the purchase. But the representation about exchanging UST for LUNA came only from the Terra website, so claimants who relied solely on the white paper could not rely on it.

Cut-off: an investor reading Mr Kwon's tweets of 11 May 2022 would have seen that the representations were false. Continued hope of a recovery, the brief de-peg of May 2021, holidays, work or family pressures did not extend the cut-off. It was extended only where a claimant could not learn of the collapse or could not sell despite trying: one claimant was at a monastery retreat without his phone, one had tokens locked by a platform bug, and one had tokens in a pool with a 14-day unlock period. It moved earlier for claimants who sold everything before the cut-off or switched to speculative swing trading.

Damages restore the claimant to the position before the purchase: purchases less sales and the notional value of unsold UST. Where the two sides' figures were close the court took the higher, being generous to the victim of fraud, and it rejected the defendants' figures where their script had misclassified transfers. Distress following a financial loss, without more, did not support aggravated damages.

Anselmo Reyes IJ allowed the claims in part. All 40 claimants proved ownership and reliance. Annex A fixes the sum for each claimant; three were left to be agreed, the parties being asked to agree a figure on the court's basis or file a joint memorandum within 14 days. No aggravated damages were awarded. Terraform and Mr Kwon are jointly and severally liable for the awards, with Luna Foundation Guard also liable where a claimant relied on its reserve-fund statement. Pre-judgment interest and costs were reserved.