A US district court has found that Terraform Labs and the company’s co-founder, Do Kwon, defrauded investors in cryptocurrency securities.
In a post published by the Division of Enforcement of the Securities and Exchange Committee (SEC), the District Court for the Southern District of New York reached the decision after a nine-day trial.
Terraform defrauds cryptocurrency investors
Terraform Labs PTE Ltd and co-founder Do Kwon have been held liable via a jury verdict after a more than two-year saga reached a decision.
The original subpoenas for Kwon and the company were filed by the SEC on June 9, 2022, and requested that “documents from Terraform and Kwon, as well as testimony from Kwon, be provided as part of an SEC investigation to determine whether Kwon and Terraform violated federal securities laws in their participation in creating, promoting, and offering to sell various digital assets related to the “Mirror Protocol,” a blockchain technology.”
The original complaint filed by the SEC on February 28, 2023 alleged that Kwon and Terraform sold crypto assets from 2018 to 2022 in unregistered transactions and perpetrated a fraudulent scheme that resulted in a loss of $40 billion in market value for retailers and retailers. investors.
With the matter now at a close, SEC Enforcement Division Director Gurbir S. Grewal said:
“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon responsible for a massive crypto fraud. Terraform Labs and Kwon, its former CEO, misled investors about the security stability of cryptocurrencies and the so-called algorithmic stablecoin Terra USD, and also misled investors that a popular payment application used the Terraform blockchain to process and settle payments.”
The decision to hold Kwon and company accountable comes after the market collapse of the cryptocurrency known as TerraUSD (UST). This cryptocurrency used to be known as “stablecoins”, these types of cryptocurrency will use an asset or currency to hold their value. This is known as a “peg”.
The collapse that TerraUSD was part of would also see Sam Bankman-Fried and the FTX cryptocurrency vanish and burn investors out of billions of dollars, as we reported earlier this month.
Director Grewal would conclude that Terraform “has caused devastating losses for investors and wiped out tens of billions in market value almost overnight. For all the promise of cryptocurrencies, the lack of registration and compliance has very real consequences for real people. As demonstrated by the hard work of our As demonstrated by our team, we will continue to use the tools at our disposal to protect the investing public, but it is time for the cryptocurrency markets to comply.”
This landmark ruling is tied to the fate of FTX and Bankman-Fried, but it could also serve as a watershed in the case to reform cryptocurrency as a whole and protect the investments of American investors.
Image: ideogram.
US Court Finds Terraform Labs Guilty of Defrauding Cryptocurrency Investors appeared first on Due.