Feb 17, 2023
SEC Charges Terraform Labs with Multi-Billion Dollar 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. In a Feb. 16 statement, the SEC said that Kwon and Terraform offered and sold an “inter-connected suite of crypto asset securities” without registering them.
SEC chair Gary Gensler commented on the case, saying that Kwon and Terraform “failed to provide the public with full, fair, and truthful disclosure” and had “committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.” The SEC filed a 55-page complaint in the U.S. District Court for the Southern District of New York with charges relating to violations of the registration and anti-fraud provisions of the Securities Act and the Exchange Act.
The SEC’s complaint focused on Terraform Labs’ now-defunct algorithmic stablecoin, TerraClassicUSD (USTC), and its connected cryptocurrency, Terra Luna Classic (LUNC). The agency 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 that lists mAssets.
The SEC said that 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.
Last May, USTC lost its peg to the U.S. dollar, causing its price — and the price of LUNC — to drop to zero, resulting in a wider collapse in the digital asset market that wiped out an estimated value of $40 billion.
Gensler commended the SEC’s staff on their investigation, adding that the defendants had attempted to prevent the SEC 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 is 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 SEC’s lawsuit against Terraform and Kwon brings to light the importance of understanding the financials of web3 projects and the need for transparency in the crypto space. NFTs and other crypto assets are becoming increasingly popular, and with that comes the need for a reliable and trustworthy NFT marketing agency to help promote projects and ensure that investors are not misled.
NFTs and other crypto assets are becoming increasingly popular, and with that comes the need for a reliable and trustworthy NFT marketing agency to help promote projects and ensure that investors are not misled. From Twitter NFT marketing to NFT promotion and selling NFTs, a web3 agency can help crypto projects reach their goals and ensure that investors are adequately informed about the financials of the project.
The SEC’s lawsuit against Terraform and Kwon serves as a reminder to investors to do their due diligence before investing in any crypto project. It is also a reminder that crypto projects must be transparent and provide full, fair, and truthful disclosure to investors. Furthermore, it underscores the need for an experienced NFT marketing agency to help promote projects and ensure that investors are not misled.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.