SEC charges Terraform Labs, Do Kwon with crypto fraud By Investing.com
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© Reuters By Ambar Warrick
Investing.com–The Securities and Exchange Commission said on Thursday that it was charging Singapore-based Terraform Labs and its founder Do Kwon for defrauding investors in a “multi-billion dollar crypto asset securities fraud.”
The charges come nearly a year after the collapse of the Terra Luna and Terra USD (UST) tokens, which saw over $30 billion of value wiped out in a matter of days.
The SEC alleged that Terraform and Do Kwon misled investors on several counts, including the assurance of returns on its tokens, how payments were processed on their platforms, and also the stability of the failed UST algorithmic stablecoin.
UST’s collapse was at the heart of Terra’s downfall in May, when the token depegged sharply from $1 and never recovered. Terra Do Kwon had allegedly absconded after the crash, which had also attracted an investigation by South Korean authorities.
“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.
The SEC complaint alleges that Terraform lied about the Korean payment application, Chai, used the Terra blockchain to process transactions.
The complaint also alleges that Kwon had a secret agreement with a third party to prop up the UST peg in May 2021, and had then made misleading statements touting the viability of the algorithmic stablecoin.
With no such backing when the token depegged a year later, UST had promptly collapsed and caused an implosion in the Terra blockchain.
“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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Terra’s collapse had caused a wave of bankruptcies in the crypto market, and was largely seen as the beginning of a prolonged downturn in the market as regulators circled and retail investors grew more wary.
The SEC’s charges against Terra come amid a broader crackdown on the crypto industry, with recent action also being .
prices sank over 3% on Friday, while fell 2%.
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© Reuters By Ambar Warrick
Investing.com–The Securities and Exchange Commission said on Thursday that it was charging Singapore-based Terraform Labs and its founder Do Kwon for defrauding investors in a “multi-billion dollar crypto asset securities fraud.”
The charges come nearly a year after the collapse of the Terra Luna and Terra USD (UST) tokens, which saw over $30 billion of value wiped out in a matter of days.
The SEC alleged that Terraform and Do Kwon misled investors on several counts, including the assurance of returns on its tokens, how payments were processed on their platforms, and also the stability of the failed UST algorithmic stablecoin.
UST’s collapse was at the heart of Terra’s downfall in May, when the token depegged sharply from $1 and never recovered. Terra Do Kwon had allegedly absconded after the crash, which had also attracted an investigation by South Korean authorities.
“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.
The SEC complaint alleges that Terraform lied about the Korean payment application, Chai, used the Terra blockchain to process transactions.
The complaint also alleges that Kwon had a secret agreement with a third party to prop up the UST peg in May 2021, and had then made misleading statements touting the viability of the algorithmic stablecoin.
With no such backing when the token depegged a year later, UST had promptly collapsed and caused an implosion in the Terra blockchain.
“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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Terra’s collapse had caused a wave of bankruptcies in the crypto market, and was largely seen as the beginning of a prolonged downturn in the market as regulators circled and retail investors grew more wary.
The SEC’s charges against Terra come amid a broader crackdown on the crypto industry, with recent action also being .
prices sank over 3% on Friday, while fell 2%.
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