Feb 17, 2023
SEC Charges Terraform Labs Founder with $Multi-Billion Crypto Asset Fraud
The United States Securities and Exchange Commission (SEC) has recently filed a lawsuit against Terraform Labs and its founder, Do Kwon, alleging the firm is responsible for a multi-billion dollar crypto asset securities fraud.
In a statement published on February 16th, the SEC said that Terraform and Kwon had offered and sold a “suite of interconnected crypto asset securities, many in unregistered transactions.” The agency highlighted Terraform Labs’ now-collapsed algorithmic stablecoin, TerraClassicUSD (USTC), and its connected cryptocurrency, Terra Luna Classic (LUNC).
SEC chair Gary Gensler commented on the charges, saying that Terraform and Kwon had failed to provide full, fair, and truthful disclosure to the public, particularly for USTC and LUNC, which were formerly known as Terra (LUNA) and TerraUSD (UST). Gensler also accused the firm of fraud, claiming that they had “repeated false and misleading statements to build trust before causing devastating losses for investors.”
The SEC’s complaint, which was filed in the U.S. District Court for the Southern District of New York, also mentioned mAssets, crypto derivatives that mirror the stock price of publicly listed companies, and Terraform’s issuance of Mirror (MIR), a governance token for the Mirror protocol that lists mAssets.
Last May, USTC lost its peg to the U.S. dollar, resulting in its price — and the price of LUNC — dropping to zero. This, in turn, caused a wider collapse in the digital asset market, wiping out an estimated value of $40 billion.
Gensler praised the SEC’s staff on their investigation, adding that Terraform and Kwon had “attempted to prevent us from obtaining important information about their business.”
Kwon, a South-Korean national, is currently at large and believed to be in Serbia after leaving his residence in Singapore sometime in September following a Seoul court issuing an arrest warrant for him. Interpol reportedly issued a Red Notice for Kwon to law enforcement worldwide later in September.
Kwon has denied he’s hiding from authorities and Terraform have claimed South Korea’s case against Kwon is “highly politicized.”
Cointelegraph contacted Terraform Labs for comment but did not receive an immediate response. Do Kwon could not be reached for comment.
The crypto asset market has grown exponentially in recent years, and with it, the need for firms to adhere to securities laws. The SEC’s lawsuit against Terraform Labs and Do Kwon is a stark reminder that crypto asset issuers must provide full, fair, and truthful disclosure to investors, or risk facing serious consequences.
The SEC’s action also emphasizes the importance of NFT marketing and promotion, especially when selling NFTs. NFT marketing agencies can help crypto asset issuers reach a wider audience and ensure that the right information is being communicated to potential investors. Twitter NFT marketing campaigns, for example, can help crypto asset issuers reach a larger audience and create more engagement around their offerings.
The web3 space is constantly evolving, and firms must stay up to date on the latest regulations and best practices in order to remain compliant. It is also important for firms to work with experienced web3 agencies that can help them navigate the complex regulatory landscape. By doing so, firms can ensure that their offerings are compliant and their investors are protected.Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.