A Jury Finds Terraform Labs and Founder Do Kwon Guilty of Civil Fraud Charges
A jury in Manhattan has delivered a verdict, finding Terraform Labs and its founder, Do Kwon, guilty of civil fraud charges. The jury alleges that Kwon and his company misled investors prior to the collapse of their ecosystem in 2022.
SEC Successful in Case Against Do Kwon and Terraform Labs
The jury’s decision aligns with the US Securities and Exchange Commission’s (SEC) long-standing view of Kwon and the Terra ecosystem. The regulator accused Kwon of lying about the stability of the TerraUSD stablecoin and making other false claims, including one about a popular Korean mobile payment app using Terraform’s blockchain.
The SEC claims that investors lost more than $40 billion after TerraUSD lost its peg to the dollar in May 2022. As a result, the regulator is seeking rulings to prohibit Kwon and Terraform from operating in the securities sector, as well as demanding civil financial penalties. US District Judge Jed Rakoff will review the sanctions in the coming weeks.
Impact on Other Companies
Terra’s decline in 2022 may have had a significant impact on other companies such as FTX, BlockFi, and Celsius.
Reactions to the Verdict
The SEC trial began on March 25th, with Kwon notably absent as he is currently in Montenegro. Local courts are deliberating his extradition to either the US or South Korea.
During the trial, SEC attorneys likened Terraform Labs to a “house of cards” and emphasized that its unregistered status posed a threat to investors. SEC Enforcement Director Gurbir Grewal stated that they were pleased with the jury’s verdict, as it held Terraform Labs and Kwon accountable for a massive crypto fraud. Grewal also emphasized the need for compliance in the crypto markets.
Statement from Terraform Labs
A representative from Terraform Labs expressed disappointment with the verdict, stating that they believe it is not supported by the evidence. They also maintain that the SEC lacks the legal authority to bring this case and are considering their options and next steps.
Hot Take: Verdict Reached in Civil Fraud Case Against Terraform Labs and Do Kwon
A jury in Manhattan has found Terraform Labs and its founder, Do Kwon, guilty of civil fraud charges. The verdict aligns with the US SEC’s view that Kwon misled investors about the stability of TerraUSD and made false claims about their blockchain usage. The SEC is seeking sanctions against Kwon and Terraform, including prohibiting them from operating in the securities sector. The trial’s outcome may have implications for other companies affected by Terra’s decline. A representative from Terraform Labs expressed disappointment with the verdict and questioned the SEC’s legal authority in bringing this case.
Sources:
– altcoinbuzz.io
– sec.gov
– twitter.com
– twitter.com
– twitter.com
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