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Albright v. Terraform Labs Pte. Ltd.

Class Suit Over Cryptocoin's Failure Is Denied Transfer to Northern District of California

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District Judge Jed Rakoff1 OPINION AND ORDER On October 21, 2022, defendants Terraform Labs, Pte. Ltd. and Jump Trading, LLC filed a motion to transfer venue to the District Court for the Northern District of California for consolidation with a class action filed in that district, Patterson v. Terraform Labs, Pte. Ltd., No. 3:22-cv-03600 (N.D. Cal. filed June 17, 2022). By order rendered orally during the initial pre-trial conference on October 31, 2022, the Court denied that motion. The reasons for this decision are set forth below. I. Factual Background On August 25, 2022, the plaintiff, Matthew Albright, brought this putative class action against the defendants on behalf of anyone who purchased TerraUS coins between May 1, 2019 and June 15, 2022. See Complaint, Dkt. 1 at 1, Albright v. Terraform Labs, Pte. Ltd., No. 1:22-cv-07281 (S.D.N.Y. filed August 25, 2022) (“Complaint”). The TerraUS coin is a kind of cryptocurrency known as a “stablecoin,” in which the price of the coin is pegged to another asset, most commonly fiat currency, exchange-traded commodities, or other cryptocurrencies. Id. at 1 n.1. Each TerraUS coin, for instance, was algorithmically pegged to the U.S. dollar and could be purchased and sold for exactly $1.00. Id. Stablecoins can serve as a useful medium of exchange because their stability assures both buyers and sellers that they will retain purchasing power over time. See New to the Crypto World? Here Are Terms to Know, N.Y. Times (June 8, 2022). Albright’s allegations run as follows. He claims that defendants misled investors of TerraUS coins into believing that the coins were stable and had the potential to generate high annual returns, while simultaneously engaging in a scheme to artificially inflate their value. See Complaint

5-6, 135. When that illusory demand inevitably evaporated, the $60 billion market for the coins crashed, allegedly generating billions of dollars in losses for members of the putative class. Id.

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