Thursday, March 30, 2023
HomeMarketSEC charges Terraform Labs and CEO Do Kwon with defrauding crypto investors

SEC charges Terraform Labs and CEO Do Kwon with defrauding crypto investors

- Advertisement -

The U.S. Securities and Exchange Commission on Thursday charged Terraform Labs, a Singapore-based crypto company, and its chief executive Do Kwon, for a multibillion-dollar crypto asset securities fraud.

In a complaint filed with the U.S. District Court for the Southern District of New York, the SEC charges the defendants with violating the registration and antifraud provisions of the Securities Act and the Exchange Act. 

Kwon could not be reached for comment.

The SEC alleges that Terraform and Kwon marketed crypto asset securities to investors with repeated claims that the tokens would rise in value. The statement from the SEC also alleges that Terraform and Kwon misled and deceived investors while marketing LUNA token, a cryptocurrency that crashed in May of 2022. Terraform and Kwon also allegedly misled investors about the stability of TerraLUNA, an algorithmic stablecoin, which depegged from the U.S. dollar leading its price to plummet to zero in May.

“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, in a statement. “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

Gensler also stated that this case demonstrates the lengths to which “crypto firms will avoid complying with the securities laws.”

In recent months, the SEC has cracked down on crypto companies, including Kraken, a popular crypto exchange, which was hit with a $30 million fine for failing to register its crypto staking program. The SEC also hit two crypto exchanges known for trading Bitcoin
Gemini and Genesis, in January, with charges related to unregistered securities.

After the collapse of stablecoin Terra, South Korean law enforcement had issued a notice to locate and arrest Kwon, who in September claimed to only share his location with friends who he plans to meet, and with people playing Web3 games.


- Advertisment -

Most Popular