Feb 17, 2023
SEC Charges Terraform Labs with $Multi-Billion Crypto Fraud
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs and its founder Do Kwon for allegedly engaging in a multi-billion dollar crypto asset securities fraud. The SEC’s complaint, which was filed in the U.S. District Court for the Southern District of New York, charges Terraform and Kwon with violations of the registration and anti-fraud provisions of the Securities Act and the Exchange Act.
The SEC’s Feb. 16 statement pointed to Terraform’s now-collapsed algorithmic stablecoin, TerraClassicUSD (USTC) and its connected cryptocurrency Terra Luna Classic (LUNC). The SEC also took issue with 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 which lists mAssets.
SEC chair Gary Gensler alleged that Kwon and Terraform “failed to provide the public with full, fair, and truthful disclosure” particularly for USTC and LUNC — formerly named Terra (LUNA) and TerraUSD (UST), and added that they “committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”
In its 55-page complaint, the SEC said Terraform and Kwon “touted and marketed” its Anchor Protocol which at one point was advertised to pay out 20% interest on USTC deposits. It also alleged Terraform and Kwon misled investors about the stability of Terra’s stablecoin.
The SEC’s allegations were backed up by the May 2022 market crash, in which USTC lost its peg to the U.S. dollar and its price, along with the price of LUNC, effectively collapsed to zero. This caused a wider collapse in the digital asset market, wiping an estimated value of $40 billion.
Commenting on the SEC’s investigation, Gensler said: “This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws. The defendants 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 last year 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.”
The SEC’s lawsuit against Terraform Labs and Kwon has highlighted the importance of responsible NFT marketing and promotion. As the use of NFTs continues to grow, crypto companies must ensure they are compliant with the relevant securities regulations. This means that when selling NFTs, companies must provide full, fair and truthful disclosure to investors in order to avoid potential legal action.
NFT marketing and promotion is a key component of any successful NFT project, and it is essential for companies to work with an experienced NFT marketing agency that understands the web3 space and can help them navigate the complexities of regulatory compliance. A knowledgeable NFT marketing agency can help companies create effective strategies to promote their NFTs on social media platforms such as Twitter, and ensure that they are compliant with the relevant regulations.
In addition, companies should seek out an experienced web3 agency that can help them design and develop their NFTs, as well as provide guidance on the best ways to sell their NFTs. Working with a web3 agency can help companies maximize the potential of their NFTs, and ensure that they are compliant with the relevant regulations.
Ultimately, the SEC’s lawsuit against Terraform Labs and Kwon is a reminder of the importance of responsible NFT marketing and promotion. Companies must ensure that they are compliant with the relevant regulations, and work with experienced NFT marketing and web3 agencies to ensure the success of their NFT projects.
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.
