SEC Sues Terraform Labs Over $Billions Crypto Fraud Scheme19. February 2023
• The US Securities and Exchange Commission (SEC) has sued Terra founder Do Kwon and his organization Terraform Labs for securities fraud.
• They allegedly raised billions of dollars by selling cryptoassets to investors, often involving unregistered transactions.
• Crypto community on Twitter questioned the SEC’s actions, while Do Kwon’s whereabouts remain unclear.
SEC Sues Terraform Labs and Do Kwon
The US Securities and Exchange Commission (SEC) has sued Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.
Details of the Alleged Fraud
The statement from the regulator noted that Do Kwon’s “scheme” between April 2018 and May 2022 “raised billions of dollars” by selling cryptoassets to investors, often involving “unregistered transactions.”The SEC also alleged that Kwon and Terraform Labs had promoted their cryptoassets by repeatedly claiming that the tokens would increase in value. It added that investors were “misled and deceived” on at least one matter involving a Korean mobile payment that was said to be using the Terra blockchain.Lastly, the SEC said Kwon and Terraform Labs misled investors about the stability of the infamous algorithmic stablecoin TerraUSD (UST).Terraform Labs is the parent company of the failed stablecoin UST and cryptocurrency Luna. The UST stablecoin was meant to have a constant $1 value via a mix of algorithms and trader incentives involving a sister token, Luna.UST lost its US dollar peg in May of last year and never recovered despite several rescue attempts from Do Kwon.
The news of the lawsuit also reached the crypto community on Twitter, where several community members questioned the SEC’s actions.Among those who commented was popular crypto trader Alex Krüger, who wondered why the SEC didn’t act sooner:Hi @SECGov why did you not do something BEFORE people lost all their money? Others offered their takes as well, asking how enforcement can work when Do Kwon and his organization are not based in America but instead Asia:How you going to enforce this one guys? A South Korean national and a Singapore based entity. Good luck $LUNA $UST
Unclear Whereabouts Of Do Kwom
Do Kwom is believed to be in Serbia but South Korean authorities haven’t been able locate him yet. Earlier reports suggested he might have traveled through various countries including Serbia, Croatia or even Thailand in order to evade prosecution from authorities back home in Korea or abroad.
In conclusion, The US Securities & Exchange Commission has filed a lawsuit against Singapore-based organization ‘Terraform’ for deceiving investors regarding its algorithmic stablecoin ‘TerraUSD’. This news stirred up controversy amongst members of Crypto Community as some questioned why did it take so long for action to be taken while others asked how will such enforcement work if both parties aren’t located within U.S jurisdiction? As for now there remains an element mystery surrounding Do Kwom’s whereabouts as he still hasn’t been located yet nor has any action been taken against him personally yet either domestically or internationally .