SEC Charges Terraform Labs & Do Kwon With Securities Fraud
SEC Charges Terraform Labs & Do Kwon With Securities Fraud.
Terra Labs Charged
On Thursday, the U.S. Securities and Exchange Commission (SEC) revealed that it has charged Terraform Labs, the company behind the failed Terra stablecoin, and its founder & CEO, Do Kwon for defrauding investors.
The SEC alleges both Terraform Labs founders Do Kwon and Hyeong Kwon of having orchestrated “a multi-billion-dollar crypto asset securities fraud,” charging them with fraud, selling unregistered securities, selling unregistered security-based swaps and other related claims after the TerraUSD stablecoin collapsed earlier in 2022.
“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.
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Today we charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) February 16, 2023
In their suit, the SEC says that Terraform and Kwon had “misled investors about one of the most important aspects of Terraform’s offering – the stability of UST, the algorithmic ‘stablecoin’ purportedly pegged to the U.S. dollar.”
SEC Director of Enforcement Gurbir Grewal describes the Terra Luna project as “neither decentralized nor finance” but rather “simply a fraud propped up by a so-called algorithmic ‘stablecoin.'”
Do Kwon’s Whereabouts
Since the collapse of the Terra ecosystem in 2022, Do Kwon’s whereabouts remain completely unknown, despite Korean authorities attempting to arrest the CEO a number of times.
According to South Korean intelligence, Kwon is currently believed to be in Serbia and is still considered to be a wanted man for his involvement in the collapse of TerraUSD.
Despite this however, back in October 2022, Do Kwon alleges that charges levelled against him by the South Korean prosecutors are “not legitimate,” arguing that he has yet to receive a copy of the Interpol’s red notice for his arrest. No further statements have been made from the Terraform Labs CEO since then about the situation.
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