- The Securities and Exchange Commission accuses Do Kwon and Terraform Labs of scam.
- Kwon was charged with soliciting billions of dollars from investors.
- Kwon nor Terraform had given investors information that was complete.
The Securities and Exchange Commission (SEC) of the United States (US) has charged Singapore-based Terraform Labs PTE Ltd. and Do Hyeong Kwon with organizing a multibillion-dollar crypto asset securities scheme using an algorithmic stablecoin and other crypto asset securities.
Today we charged 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.
— U.S. Securities and Exchange Commission (@SECGov) February 16, 2023
Since the company declared bankruptcy in May last year, this is not surprising. The company’s decision to unpeg Stablecoin UST sent shockwaves across the cryptocurrency market, leading to widespread pessimism, the recording of new lows, and a shift in the behavior pattern of digital currencies.
Terraform Labs and Kwon are allegedly accused of soliciting billions of dollars from investors, most of which were reportedly conducted in unregistered transactions, according to reports posted on Wu Blockchain’s Twitter account. Using the Anchor Protocol, they advertised and marketed UST as a “yield-bearing” stablecoin capable of paying up to 20% interest on investments.
In a subsequent tweet thread, Wu Blockchain noted that the SEC had expressly stated in the complaint that Luna and UST are both unregistered securities.
The SEC explicitly alleges in the filing that Luna and UST are unregistered securities.
— Wu Blockchain (@WuBlockchain) February 17, 2023
However, Gary Gensler, head of the Securities and Exchange Commission, said that Kwon and Terraform had yet to give investors information that was complete, impartial, or honest. More specifically, Terra (LUNA) and TerraUSD (United States Time Coordinated) are recognized as being USTC and LUNC (UST).
Do Kwon has been on the run since Terraform Labs went bankrupt; at this time, no one knows his location. On the other hand, according to a recent report from South Korean authorities, it was thought that Kwon had relocated to Serbia.