Feb 17, 2023
SEC Files Multi-Billion Dollar Crypto Fraud Lawsuit Against Terraform Labs Founder
The United States Securities and Exchange Commission (SEC) has taken legal action against Terraform Labs and its founder, Do Kwon, accusing them of orchestrating a multi-billion dollar crypto asset securities fraud.
On February 16, the SEC released a statement outlining the charges against Terraform Labs and Kwon, which includes offering and selling a range of crypto asset securities without registration. The Commission highlighted Terraform’s now-defunct algorithmic stablecoin, TerraClassicUSD (USTC), and its related cryptocurrency, Terra Luna Classic (LUNC).
SEC Chair Gary Gensler said in a statement that Kwon and Terraform had failed to provide the public with full disclosure, particularly for USTC and LUNC, which were previously known as Terra (LUNA) and TerraUSD (UST). He added that the defendants had also “committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”
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 that lists mAssets.
The Commission filed a 55-page complaint in the U.S. District Court for the Southern District of New York that lists violations of the registration and anti-fraud provisions of the Securities Act and the Exchange Act.
The complaint accuses Terraform and Kwon of “touting and marketing” their Anchor Protocol, which promised to pay out 20% interest on USTC deposits. It also alleges Terraform and Kwon misled investors about the stability of their stablecoin.
The SEC’s investigation into the case was complicated by Kwon, who is a South-Korean national and is currently believed to be in Serbia after leaving his residence in Singapore in September. Interpol has since issued a Red Notice for Kwon to law enforcement worldwide.
Kwon has denied he is hiding from authorities and Terraform have claimed South Korea’s case against Kwon is “highly politicized.”
The collapse of USTC in May last year, which saw its price drop to zero, caused a wider collapse in the digital asset market that wiped out an estimated value of $40 billion.
The SEC’s legal action against Terraform and Kwon is a warning to crypto firms that the Commission is serious about enforcing the securities laws. It also highlights the importance of using trusted NFT marketing and promotion services, as well as a web3 agency to help navigate the web3 space.
For those looking to sell NFTs, the SEC’s case serves as a reminder of the importance of transparency and full disclosure, as well as the need to use Twitter NFT marketing and an NFT marketing agency to ensure full compliance with the law.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.