The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly “managing a multibillion-dollar cryptocurrency securities fraud.”
February 16 statementThe SEC said that Kwon and Terraform offered and sold “an interconnected set of crypto-asset securities, many of which were in unrecorded transactions.” He pointed to his algorithmic stablecoin TerraClassicUSD (USTC) and its related cryptocurrency Terra Luna Classic (LUNC).
The Securities and Exchange Commission also took issue with mAssets, crypto derivatives that reflect the share price of publicly listed companies, and the issuance of Terraform Mirror (MIR), a Mirror protocol governance token that lists mAssets.
In a statement, SEC Chairman Gary Gensler said that Kwon and Terraform “failed to provide the public with complete, correct and truthful information”, especially regarding USTC and LUNC, formerly Terra (LUNA) and TerraUSD (UST), and added:
“We also allege that they committed fraud by repeating false and misleading statements in order to gain credibility before inflicting devastating losses on investors.”
The Securities and Exchange Commission filed complaint in the United States District Court for the Southern District of New York on charges of violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act.
Today, we charged Singapore-based Terraform Labs PTE Ltd and Do Hyun Kwon with orchestrating a multi-billion dollar crypto-related securities fraud using an algorithmic stablecoin and other crypto-related securities.
— US Securities and Exchange Commission (@SECGov) February 16, 2023
Gensler praised the SEC staff for their investigation and stated, “The defendants tried to prevent us from obtaining important information about their business.”
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“This case demonstrates the lengths some crypto firms are willing to go to avoid complying with securities laws,” he added.
This is an evolving story and more information will be added as it becomes available.
Credit : cointelegraph.com
