- SEC charges Terraforms and Do Kwon with fraud.
- Investors are a step closer to getting justice after losing a fortune in investments.
The U.S. securities and exchange commissions is charging Do Kwon for violating the registration and anti-fraud provisions of the Securities Act and the Exchange Ac. Do Kwon, the founder of Terraform Labs, is said to have taken part in a multi-billion dollar fraud that involved extorting investors of their funds.
The SEC took to Twitter to share the news with the cryptocurrency community. “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.” The SEC shared in a tweet.
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 a press release shared by the SEC, it was made apparent that from April 2018 to May 2022, Terraform Labs and its founder Do Kwon, were offering crypto asset securities, many of which were in unregistered transactions. Kwon raised billions of dollars from investors as a result.
The crypto asset securities that were unregistered include mAssets and Terra USD (USDT). mAssets is a security-based swaps created for the purpose of paying returns, by mirroring the prices of stocks in U.S. companies. Terra USD, the more popular asset, is being branded as security by the SEC as well. The asset was a stablecoin pegged to the U.S. dollar and could be interchangeable with LUNA. In addition, Terraforms and Do Kwon have also allegedly sold MIR, also known as Mirror tokens to investors.
Investors are closer to getting justice
Gary Gensler, the SEC chairman, believes that the public was not provided with enough transparency, necessary to guide their decisions surrounding investments in LUNA and Terra USD. Gensler maintains that Kwon committed fraud by putting out repetitive statements that were both false and misleading. Investors were at the receiving end of this, as they saw devastating losses in the end.
I commend the SEC’s hard-working staff who remained vigilant in such an important investigation, even when the defendants attempted to prevent us from obtaining important information about their business. This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.
No spam, no lies, only insights. You can unsubscribe at any time.
In addition, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, also made a notable statement.
Grewal explains that the SEC has succeeded in holding the defendants accountable for the role that they played in the downfall of Terra. He reinforces his stance that the SEC only prioritizes the realities of an offering, “not the labels put on it.” Grewal went on to explain that the Terraform ecosystem was neither decentralized nor was it pertaining to finance. It was simply a fraudulent scheme disguised and presented as an “algorithmic stablecoin.” The price of the asset was not controlled by code, but by the defendants, he added.
Crypto News Flash does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned.
