https://ift.tt/WoBLuzp The U.S. Securities and Exchange Commission (SEC) has charged Terraform Labs and its CEO, Do Hyeong Kwon, with fra...
The U.S. Securities and Exchange Commission (SEC) has charged Terraform Labs and its CEO, Do Hyeong Kwon, with fraud, alleging that Kwon and his company orchestrated “a multibillion-dollar crypto-asset securities fraud.” The securities watchdog insists that Kwon raised billions from investors by creating an “interconnected suite of crypto-asset securities,” many of which were involved in unregistered transactions.
SEC Charges Terra’s Do Kwon and Terraform Labs With Defrauding Investors
Nine months after the entire Terra blockchain ecosystem collapsed, the U.S. Securities and Exchange Commission (SEC) charged the Singaporean company Terraform Labs Pte. Ltd. and the firm’s CEO, Do Kwon. The SEC detailed on Thursday that Terraform and Kwon raised billions from venture capitalists and created a suite of unregistered securities and mirrored assets that replicated the value of U.S. stocks. The government’s complaint also mentions the now-defunct UST algorithmic stablecoin.
The regulator stressed that both Terraform’s employees and Kwon marketed these unregistered securities to “earn a profit,” and detailed that Kwon “repeatedly claimed that the tokens would increase in value.” Regarding the algorithmic stablecoin UST, Kwon “allegedly misled investors about the stability of UST,” the SEC complaint notes. This is not the first time Terraform Labs had a tussle with the U.S. securities regulator, as the SEC filed an action against the company over the Mirror Protocol and its mirrored stock assets in 2021.
In 2022, a New York judge ordered Terraform Labs to comply with the SEC’s investigative subpoenas. The SEC now charges the company and Kwon with violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act. “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto-asset securities, most notably for LUNA and Terra USD,” SEC chair Gary Gensler said in a statement.
Gensler further added:
We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.
The U.S. regulator’s charges against Terraform and Kwon follow the SEC’s enforcement actions against Kraken and its staking services. Additionally, the New York Department of Financial Services (NYDFS) told Paxos it could no longer mint the stablecoin BUSD while also issuing a consumer notice regarding BUSD. The SEC complaint filed against Kwon and Terraform was submitted to the US District Court for the Southern District of New York. Do Kwon was last active on Twitter during the first week of February 2023.
What do you think about the SEC’s charges against Do Kwon and Terraform Labs? Share your thoughts about this subject in the comments section below.
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