U.S. Securities and Exchange Commission (SEC) charged both Terraform Labs and its CEO Do Hyeong Kwon with securities fraud, alleging that Kwon and his company orchestrated “a multi-billion dollar crypto asset fraud.” The securities watchdog claims Kwon raised billions from investors by creating an “interconnected pool of crypto asset securities,” many of which have been involved in off-the-record transactions.
SEC Accuses Do Kwon and Terraform Labs of Defrauding Buyers
Nine months after the collapse of Terra’s blockchain ecosystem, the U.S. Securities Exchange Commission (SEC) charged Singapore-based firm Terraform Labs Pte. Ltd. as well as its CEO Do Kwon. In its official statement, the SEC specified Thursday that Terraform enterprise capitalists raised billions of dollars and created a pool of unregistered securities that mirrors the value of U.S. stocks. In the authorities’ complaint, UST is also mentioned.
The regulator stressed that both Terraform Staff and Kwon committed fraud by trading these unregistered securities “to make a profit” as detailed and that Kwon “allegedly misled investors about the stability of UST.” This is not the first time the SEC filed a motion to the SEC regarding the matter. The Mirror Protocol, its mirrored asset system, was launched in 2021.
In 2022, a New York judge ordered Terraform Labs to adjust SEC investigative subpoenas. The SEC accused Terraform and Kwon of violating anti-fraud and registration provisions of the Securities Act and the Exchange Act. “We allege that Terraform and Do Kwon failed to provide full, fair, and truthful disclosure to the public as is required for a large number of crypto-asset securities, especially LUNA and Terra USD,” SEC Chairman Gary Gensler said in a press release.
Gensler added:
Furthermore, they are charged with fraud by making false and deceptive statements to gain trust and causing significant losses to investors.
The SEC’s charges against Terraform and Kwon follow the regulator’s enforcement actions against Kraken’s staking services. Additionally, the New York State Department Of Financial Services (NYDFS) also stated that the BUSD stablecoin may not have been produced and issued a consumer advisory on BUSD. The SEC’s complaint against Kwon and Terraform was submitted to the U.S. District Court for the Southern District Of New York. Do Kwon was last active on Twitter during the first week of February 2023.
Do you think the SEC charges are warranted? What is your opinion on Do Kwon and Terraform Labs? Please share your thoughts on the matter in the comment section below.
