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  • Writer's pictureBy The Financial District

Terraform Labs Chief Do Kwon Found Liable In U.S. Civil Fraud Trial

A jury in Manhattan has found Singapore-based Terraform Labs and its founder Do Kwon liable on civil fraud charges, agreeing with the US Securities and Exchange Commission (SEC) that they misled investors before their stablecoin's 2022 collapse shocked cryptocurrency markets, Jody Godoy reported for Reuters.


The SEC accused the company and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1. I Photo: Terra Powered by LUNA X



The jury delivered the verdict in federal court in the two-week trial after hearing closing arguments earlier in the day.


The SEC accused the company and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1. The regulator also accused them of falsely claiming Terraform's blockchain was used in a popular Korean mobile payment app.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Kwon designed TerraUSD and Luna, a more traditional token that fluctuated in value but was closely linked to TerraUSD.


The SEC has estimated that investors lost more than $40 billion on the two tokens combined when the TerraUSD peg to the dollar could not be maintained in May 2022.


The SEC is seeking civil financial penalties and orders barring Kwon and Terraform from the securities industry. US District Judge Jed Rakoff will consider penalties in the coming weeks after hearing from the SEC and the defendants.




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