After a two-week trial, a New York jury has found Terraform Labs and its Co-Founder, Do Kwon, guilty of deceiving investors about the stability of their stablecoin, UST. This verdict is a significant win for the SEC in their efforts to tighten oversight of the digital currency sector. The collapse of UST in 2022 caused a devastating $40 billion loss for investors and sent shockwaves through the cryptocurrency world.
This judgment may also have implications for Kwon’s upcoming criminal trials in the United States and South Korea. In these countries, the criteria for establishing guilt are more severe. Kwon, who holds a 92% control of Terraform, was detained in Montenegro for using a counterfeit passport and now faces extradition to either the U.S. or South Korea, where he is facing criminal fraud charges.
Recently, the Supreme Court of Montenegro challenged previous decisions favoring Kwon’s extradition to Seoul, making his potential extradition more likely. Deliberating for under two hours, the jury found Kwon and his company guilty of making false claims about the use of Terraform’s blockchain technology by Chai, a widely used payment app in Korea. The verdict also noted misleading information about the stability of the UST stablecoin, which was purported to maintain a consistent value pegged to the US dollar through algorithms.
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