Key Takeaways The SEC filed suit against Terraform Labs and Do Kwon. It alleges that Kwon sold unregistered securities and violated anti-fraud provisions of the federal securities laws. The agency wants civil money penalties, disgorgement and Kwon be banned from buying or selling crypto assets. Share this article
Nine months after Terra’s spectacular meltdown, the SEC has finally decided to charge Do Kwon.
banned from crypto
Do Kwon is in the limelight once again.
The Securities and Exchange Commission filed a civil lawsuit against TerraForm Labs and its infamous CEO Do Kwon over Terra and its native algorithmic stablecoin, UST. The SEC accused the defendants of offering and selling various unregistered securities to investors and violating anti-fraud provisions of the federal securities laws.
Among other things, the agency seeks civil money penalties, payment of disgorgement with interest, and re-prohibition of Quon and TerraForm Labs from buying, selling or offering “crypto asset securities”.
SEC Chairman Gary Gensler said, “We allege that TerraForm and Do Kwon failed to provide full, fair and truthful disclosure to the public, which is required of a host of crypto asset securities, most notably Luna and Terra. for USD.” “We also allege that they committed fraud by repeating false and misleading statements to create confidence before causing catastrophic losses for investors.”
Stablecoins are cryptocurrencies designed to live on parity with government-issued currency, such as the US dollar. Terra’s stablecoin was low-collateralized, meaning it was not backed 1:1 with reserves. Instead, the protocol will burn Terra’s native token, LUNA, to mine an equivalent amount of UST – or, conversely, mint LUNA tokens to redeem UST. The flywheel mechanism eventually sent LUNA and UST into a death spiral, wiping out over $40 billion directly from the crypto market.
Quan is currently wanted in 195 countries after Interpol issued a red notice for him. South Korean officials claimed in December that he was hiding in Serbia.
Disclaimer: At the time of writing, the author of this piece held BTC, ETH and several other crypto assets.
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