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U.S. SEC Charges SoKor Cryptocrash Boss Do Kwon With $42-B Fraud
- By The Financial District
- Feb 21, 2023
- 2 min read
US financial regulators have charged failed South Korean cryptocurrency boss Do Kwon and his company Terraform Labs with "orchestrating a multi-billion-dollar crypto asset securities fraud."
Photo Insert: Globally, investors in TerraUSD and Luna lost an estimated $42 billion, according to blockchain analytics firm Elliptic.
The Singapore-based firm created the Terra Luna and TerraUSD tokens, which collapsed spectacularly last year. The collapse is estimated to have cost investors more than $40bn (£33.5 billion), Annabelle Liang reported for BBC News on Feb. 17, 2023.
"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," US Securities and Exchange Commission (SEC) chairman Gary Gensler said 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," he added.
According to the SEC, Kwon and his company raised billions of dollars from investors by selling them "an interconnected suite of crypto asset securities" with many transactions being unregistered.
The SEC also alleged Mr. Kwon and Terraform claimed repeatedly that the tokens would increase in value, and misled investors about the stability of TerraUSD. However, the value of the token and its linked Luna cryptocurrency plunged to close to zero in May last year.
Globally, investors in TerraUSD and Luna lost an estimated $42 billion, according to blockchain analytics firm Elliptic.
It triggered a sell-off in major cryptocurrencies such as Bitcoin, Ethereum and Tether. As a result, the term cryptocrash trended online. "I am heartbroken about the pain my invention has brought on all of you," Kwon said at the time.
The SEC complaint, which included other allegations, did not state where Kwon was located. In December, South Korean authorities, who have issued an arrest warrant for Kwon, said they believed he was in Serbia.
