For the New York jury, Do Kwon and Terraform Labs are accused of being responsible for fraud in the case against the United States Securities and Exchange Commission (SEC).
The new verdict condemns the crypto company and its co-founder for deceiving investors through the native “algorithmic” stablecoin, Terra USD (UST), and the Terra blockchain.
New York: the verdict condemns Do Kwon and Terraform Labs for fraud in the case conducted by the SEC of the USA
According to what reported, the New York jury has issued a new verdict condemning Do Kwon and Terraform Labs for crypto fraud, in the case brought by the United States Securities and Exchange Commission (SEC).
Basically, the SEC of the USA would have accused the crypto company Terraform Labs and its co-founder Do Kwon of civil fraud, in relation to the $40 billion implosion of the Terra ecosystem in May 2022.
Specifically, the SEC has accused Terraform Labs and Kwon of misleading investors about the stability of its native “algorithmic” stablecoin, Terra USD (UST), and the use cases of the Terra blockchain.
Apparently, the jury would have agreed with the SEC’s accusations, condemning Kwon for insinuating that the stablecoin algorithm was able to “self-repair automatically” in case of de-peg.
In reality, the stablecoin seems to be based on continuous trading activity, including large-scale trading carried out by institutional investors.
In this regard, Gurbir Grewal, director of the SEC Division of Enforcement, reportedly commented:
“We are satisfied with today’s verdict of the jury that finds Terraform Labs and Do Kwon responsible for a massive cryptocurrency fraud”
New York: SEC wins against Do Kwon and Terraform Labs, accused of crypto fraud
The verdict, which sees the SEC of the USA victorious, was issued just two hours after the lawyers of the SEC and the defendants had presented their final arguments, at the end of the nine-day trial in New York.
Always Grewal has added more comments about it:
“The defendants have caused devastating losses for investors and have wiped out tens of billions of market value almost overnight. Despite the promises of cryptocurrency, the lack of registration and compliance has very real consequences for real people. As demonstrated by the hard work of our team, we will continue to use the tools at our disposal to protect the investing public, but it is time for cryptocurrency markets to get in line.”
On the other hand, the lawyers of Terraform Labs and Do Kwon also tried to refute the accusations, stating that all “reasonable” investors knew that the algorithm that kept UST anchored to the dollar was not a “magic machine” or a “computer that worked on its own”, but rather a minting and burning operation carried out by market operators.
Release from prison in Montenegro
Meanwhile, since March 23, 2024, Do Kwon has been released from prison in Montenegro, where he had been detained for a year. His arrest in the country was carried out solely for using forged travel documents, along with his colleague Han Chang-joon.
After serving his sentence, Do Kwon was delivered into the hands of the Montenegro foreign police, who will take care of him.
During his detention period, the co-founder of Terraform Labs managed to have the extradition decision to the USA revoked for the third time.
The trial and the new verdict in his case against the US SEC happened in his total absence.