Coin Live Prices – Crypto Price Tracker & Latest Coin News
Image default
Files Lawsuit

SEC Files Lawsuit Against Do Kwon And Terraform Labs

More than nine months after the fall of Terra sent a downturn to the entire market, legal action being taken by the US SEC.

The United States Securities and Exchange Commission (SEC) announced on Thursday it initiated a lawsuit against Terraform Labs and its chief executive officer Do Hyeong Kwon (Do Kwon).

The two defendants were investigated for allegedly violating the security law through the sale of stablecoin Terra USD and token LUNA.

The Never Ending Story

SEC filed a complaint to the Southern District of New York Court, accusing the entity behind the Terra cryptocurrency project and its founder of violating the registration and anti-fraud provisions of the Securities and Exchange Act.

In November last year, the SEC also asked the court to issue subpoena enforcement to request investigative cooperation from Do Kwon and his entity.

According to the agency’s statement, Terraform and Do Kwon did not provide sufficient, transparent, and honest information about USTC and LUNC.

SEC chairman Gary Gensler stressed, “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

It took almost a year for the US watchdog to step up with concrete action following investigation efforts.

Meanwhile, the extended crypto winter, beginning with the downfall of Terra LUNA, caused a series of brutal collapses such as FTX, Celsius, and Three Arrows Capital.

Multi Jurisdiction Madness!

Terraform Labs faced severe probes from Korean watchdogs and the SEC after the $60 billion collapse.

The company has been investigated by the Seoul Police Department (Korea) for property embezzlement. In June 2022, SEC initiated an investigation into Terra’s collapse and whether its stablecoin violated federal securities regulations.

The agency also worked remotely with several key TerraForm Labs employees, focusing on the weak designs of the Luna project.

These employees said they predicted the demise of Terra and Luna, then sent a danger warning to CEO Do Kwon, but were all dismissed.

The SEC sued Terraform and Do Kwon for offering and selling crypto-asset securities without legal registration, raising billions of dollars from investors between April 2018 and May 2022.

The defendants were accused of failing “to provide the public with full, fair, and truthful disclosure” when marketing these securities.

Gurbir Grewal, the Director of the SEC’s Division of Enforcement, said in a statement that the Terraform ecosystem was not decentralized, it was simply a fraud backed by the algorithm stablecoin.

Terra Was Messy

The SEC further claims that Terraform and Kwon provided deceptive disclosure about the Terra blockchain being used by a major Korean mobile payment service to settle transactions that collect value for LUNA while marketing the LUNA token.

Finally, regulators claimed that Terraform Laboratories and Kwon deceived investors regarding the stability of UST.

Terra USD de-pegged in May of last year, losing more than 90% of its worth. The collapse of Terra sent the crypto market into a tailspin, with Bitcoin shedding a third of its value to less than $40,000.

From the death of Terra’s stablecoin to the vulnerability of the decentralized finance (DeFi) concept. Finally, the failure of a major cryptocurrency exchange, FTX, has increased the risk of many existing models.

Despite being the most wanted, Do Kwon is still involved in all aspects of Terraform Labs’ day-to-day operations, including strategy and product development, according to Zion Schum, Terraform Labs Communications Director.

Terraform Labs is known to be reorienting Terra 2.0 so that it can be linked to a variety of other blockchains. The company is working on a number of other projects to expand on the concept.

Do Kwon’s final public appearance was an interview with Coinage in August 2022, followed by another unofficial appearance after the FTX demise occurred in late 2022.

Do Kwon is being sought by the International Criminal Police Organization (Interpol) at the request of Korean authorities.

Read More

Related posts

Celsius Files to Resume Withdrawals for Select Customers

CoinLivePrices.com

Consensys Files Lawsuit Against SEC Over Ethereum Regulation

CoinLivePrices.com

CoinFLEX Files Restructuring Case in Seychelles Court

CoinLivePrices.com

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.