Terraform Labs and Co-Founder Do Kwon Found Guilty of Fraud in SEC Case
Terraform Labs and its co-founder, Do Kwon, have been found guilty of fraud in a civil case brought against them by the United States Securities and Exchange Commission (SEC).
The jury in the U.S. District Court for the Southern District of New York delivered the verdict in federal court after a two-week trial after hearing closing arguments earlier in the day, according to an official announcement.
The SEC alleged that Terraform Labs and its former CEO, Kwon, deceived investors regarding the stability of their crypto asset security and algorithmic stablecoin called Terra USD.
Furthermore, they were accused of misleading investors about whether Terraform’s blockchain was used by a popular payment application for processing and settling payments.
“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud,” said SEC Enforcement Director Gurbir Grewal.
“Terraform Labs and Kwon, its former CEO, deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform’s blockchain to process and settle payments.”
SEC Attorneys Liken Terraform Labs to “House of Cards”
Throughout the trial, SEC attorneys likened the platform to a “house of cards” and alleged that the company and Kwon had lied to investors.
According to the verdict filed on April 5, the jury found Kwon and Terraform Labs liable for six charges.
Additionally, they determined that the platform had acted recklessly by making false or misleading statements regarding the offer or sale of TerraUSD (UST), Luna, or wLUNA.
Today, after a nine-day trial, a jury in the United States District Court for the Southern District of New York found Terraform Labs PTE Ltd. & Do Kwon liable for defrauding investors in crypto asset securities.
More: https://t.co/dRtq3ITGMG pic.twitter.com/kwlpKXxv6r
— U.S. Securities and Exchange Commission (@SECGov) April 5, 2024
The collapse of Terraform Labs occurred in May 2022, following the instability of its algorithmic stablecoin, UST, and other concerns surrounding the blockchain’s use cases.
This collapse had significant implications for the crypto market, contributing to a major downturn and leading to bankruptcy filings from prominent firms such as FTX, BlockFi, and Celsius.
The SEC filed its lawsuit against Terraform and Kwon in February 2023, accusing them of orchestrating a multi-billion dollar crypto asset securities fraud.
In December, Judge Jed Rakoff granted a partial summary judgment in favor of Terraform regarding the unregistered offer and sale of security-based swaps.
Do Kwon’s Extradition Case Sent Back To Lower Court
Meanwhile, the impact of the verdict on Kwon’s extradition from Montenegro remains uncertain.
Just recently, Montenegro’s Supreme Court said it had approved the protection of legality of a prior decision from a lower court approving Kwon’s extradition to South Korea.
Both the United States and South Korea have filed competing claims for Kwon’s extradition, with Montenegro now juggling whose claim to prioritize.
Kwon’s legal team is pushing for extradition to South Korea first, where analysts expect he’ll be given a lighter sentence.
Prosecutors claimed the appellate court had violated procedure by rejecting an appeal from Kwon’s legal team on the matter, and instead putting the decision in the Supreme Court’s hands.
The Supreme Court, however, said decisions of this sort are not its responsibility.
The post Terraform Labs and Co-Founder Do Kwon Found Guilty of Fraud in SEC Case appeared first on Cryptonews.
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Terraform Labs and Co-Founder Do Kwon Found Guilty of Fraud in SEC Case
Terraform Labs and its co-founder, Do Kwon, have been found guilty of fraud in a civil case brought against them by the United States Securities and Exchange Commission (SEC).
The jury in the U.S. District Court for the Southern District of New York delivered the verdict in federal court after a two-week trial after hearing closing arguments earlier in the day, according to an official announcement.
The SEC alleged that Terraform Labs and its former CEO, Kwon, deceived investors regarding the stability of their crypto asset security and algorithmic stablecoin called Terra USD.
Furthermore, they were accused of misleading investors about whether Terraform’s blockchain was used by a popular payment application for processing and settling payments.
“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud,” said SEC Enforcement Director Gurbir Grewal.
“Terraform Labs and Kwon, its former CEO, deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform’s blockchain to process and settle payments.”
SEC Attorneys Liken Terraform Labs to “House of Cards”
Throughout the trial, SEC attorneys likened the platform to a “house of cards” and alleged that the company and Kwon had lied to investors.
According to the verdict filed on April 5, the jury found Kwon and Terraform Labs liable for six charges.
Additionally, they determined that the platform had acted recklessly by making false or misleading statements regarding the offer or sale of TerraUSD (UST), Luna, or wLUNA.
Today, after a nine-day trial, a jury in the United States District Court for the Southern District of New York found Terraform Labs PTE Ltd. & Do Kwon liable for defrauding investors in crypto asset securities.
More: https://t.co/dRtq3ITGMG pic.twitter.com/kwlpKXxv6r
— U.S. Securities and Exchange Commission (@SECGov) April 5, 2024
The collapse of Terraform Labs occurred in May 2022, following the instability of its algorithmic stablecoin, UST, and other concerns surrounding the blockchain’s use cases.
This collapse had significant implications for the crypto market, contributing to a major downturn and leading to bankruptcy filings from prominent firms such as FTX, BlockFi, and Celsius.
The SEC filed its lawsuit against Terraform and Kwon in February 2023, accusing them of orchestrating a multi-billion dollar crypto asset securities fraud.
In December, Judge Jed Rakoff granted a partial summary judgment in favor of Terraform regarding the unregistered offer and sale of security-based swaps.
Do Kwon’s Extradition Case Sent Back To Lower Court
Meanwhile, the impact of the verdict on Kwon’s extradition from Montenegro remains uncertain.
Just recently, Montenegro’s Supreme Court said it had approved the protection of legality of a prior decision from a lower court approving Kwon’s extradition to South Korea.
Both the United States and South Korea have filed competing claims for Kwon’s extradition, with Montenegro now juggling whose claim to prioritize.
Kwon’s legal team is pushing for extradition to South Korea first, where analysts expect he’ll be given a lighter sentence.
Prosecutors claimed the appellate court had violated procedure by rejecting an appeal from Kwon’s legal team on the matter, and instead putting the decision in the Supreme Court’s hands.
The Supreme Court, however, said decisions of this sort are not its responsibility.
The post Terraform Labs and Co-Founder Do Kwon Found Guilty of Fraud in SEC Case appeared first on Cryptonews.
Read More