A federal trial court jury has found collapsed crypto company Terraform Labs and its founder Do Kwon liable in the fraud charges brought by the U.S. Securities and Exchange Commission (SEC) in February last year.
According to the SEC, Kwon and his firm offered and sold crypto asset securities and carried out a fraudulent scheme between April 2018 and May 2022 that led to billions of dollars of losses to US retail and institutional investors.
On Friday, a jury in the US District Court for the Southern District of New York validated the SEC’s claims when it found Kwon and Terraform Labs liable for defrauding investors after a nine-day trial.
Gurbir S. Grewal, the SEC Division of Enforcement Director says the actions of Kwon and Terraform Labs have caused real harm to investors.
“Terraform Labs and Kwon, its former CEO, deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform’s blockchain to process and settle payments.
For all of crypto’s promises, the lack of registration and compliance have very real consequences for real people.”
Kwon was initially arrested in Montenegro in March 2023 after attempting to board a flight to the United Arab Emirates (UAE) with a forged Costa Rican passport. He is also facing criminal charges in South Korea related to the multibillion-dollar downfall of Terra and its stablecoin Terra USD.
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