Terraform Labs and founder Do Kwon found liable for civil fraud charges in US

From Investing.com: 2024-04-05 18:38:37

A jury in Manhattan found Terraform Labs and founder Do Kwon liable for civil fraud charges. SEC accused them of misleading investors about TerraUSD stability and falsely claiming Terraform’s blockchain was used in a Korean payment app. Investors lost over $40 billion when TerraUSD’s peg to the dollar failed in 2022.

SEC is seeking financial penalties and orders barring Kwon and Terraform from the securities industry. Terraform is disappointed by the verdict and considering options. Judge Jed Rakoff will consider penalties in the coming weeks. Kwon, now arrested in Montenegro, did not attend the trial.

SEC pleased with verdict, emphasizes importance of compliance in crypto markets. Collapse of TerraUSD and Luna caused wider havoc in crypto market, leading to bankruptcy filings. Terraform filed for bankruptcy protection in January. Kwon faces extradition requests from the U.S. and South Korea on criminal charges.

SEC accused Kwon and Terraform of propping up TerraUSD price with third-party purchases in 2021. Kwon falsely attributed recovery to algorithms. Terraform’s lawyer says SEC took statements out of context. Terraform still working to rebuild and compensate purchasers. Terraform lost argument that securities laws did not apply to their cryptocurrencies.

Read more at Investing.com: Terraform Labs and founder Do Kwon found liable in US civil fraud trial By Reuters