The U.S. Securities and Exchange Commission on Thursday charged Singapore-based Terraform Labs and founder and CEO Do Hyeong Kwon—better known as Do Kwon—with securities fraud involving its algorithmic stablecoin Terra USD and the LUNA token.
The complaint, filed in the U.S. District Court for the Southern District of New York, charges the defendants with violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act.
“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,” said SEC Chair Gary Gensler. “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”
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
The SEC’s charges come nearly a year after the collapse of Terra Luna, which brought on a year-long crypto winter that saw many prominent companies, including FTX, Celsius, and Three Arrows Capital, fail last year.
In June 2022, the SEC announced opening an investigation into the collapse of Terra and whether its stablecoin violated federal securities regulations. Earlier that year, the Terra ecosystem was rocked by the $60 million implosion of the Terra stablecoin and the collapse of its LUNA token.
According to the SEC’s lawsuit, the agency accuses Terraform and Kwon of raising billions in investor funds from April 2018 until May 2022 by offering and selling an “inter-connected suite of crypto asset securities, many in unregistered transactions.” The SEC claims Terraform Labs and Do Kwon marketed “crypto asset securities” to investors seeking to profit from investing in Terra UST and related Terra products claiming that the tokens would increase in value.
“As alleged in our complaint, the Terraform ecosystem was neither decentralized nor finance. It was simply a fraud propped up by a so-called algorithmic 'stablecoin'—the price of which was controlled by the defendants, not any code,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a statement.
The SEC also alleges that, while marketing the LUNA token, Terraform and Kwon repeatedly misled and deceived investors that a popular Korean mobile payment application used the Terra blockchain to settle transactions that would accrue value to LUNA.
Finally, the regulators assert that Terraform Labs and Kwon misled investors about the stability of UST.
On May 7, 2022, Terra USD depegged from the USD dollar, sending the price of the LUNA token into freefall and close to zero after Kwon flooded the market with LUNA tokens in an attempt to save the stablecoin.
“Today’s action not only holds the defendants accountable for their roles in Terra’s collapse, which devastated both retail and institutional investors and sent shock waves through the crypto markets, but once again highlights that we look to the economic realities of an offering, not the labels put on it,” Grewal said.
Meme, DOGE, crypto market, market, Meme is the happiest Ponzi scheme and no one wants a happy ending. Golden Finance, although the currency may change, the temptation of getting rich quickly will never disappear.
JinseFinanceSocial media platforms, particularly Meta's, are increasingly targeted by scammers worldwide, raising concerns about user safety and the effectiveness of platform moderation. Despite efforts to combat scams, Meta's response to fabricated news and inadequate safety measures underscore the ongoing challenge of protecting users from online threats.
WeatherlyIn a move to combat telephone fraud, a law enforcement agency recently executed an operation that led to the apprehension of two individuals, aged 20 and 33. The arrests took place in a public facility, and the suspects are currently under investigation for their involvement in a series of fraudulent activities.
JoyFTX clientele finds itself confronted by a deceptive priority withdrawal scam. These misleading emails purportedly originate from FTX Trading, West Realm Shires Services, and FTX EU.
CatherineThe scam of JPEX is heavily dependent on the “celebrity effect” to infiltrate various platforms, channels, and even different regions for promotion.
OliveA group of hackers exploited the Twitter account of a crypto exchange, Gate io, to promote fraudulent activities. In an ...
BitcoinistCybercriminals drew thousands to a fake stream on YouTube inducing many to click on fake cryptocurrency advertisements.
BeincryptoCrypto scam is a pain in the neck for governments around the globe. It involves a huge amount of money ...
BitcoinistCatherineOn Sunday, hackers took control of the British Army's official social media accounts, using them to promote fraudulent NFT collections ...
Bitcoinist
