• The US Securities and Exchange Commission (SEC) has accused Terraform Labs, the Singapore-based company behind the creation of LUNA and UST crypto assets, and its co-founder Do Kwon of promoting a multi-billion dollar fraud through the use of unregistered securities.
• The SEC’s complaint argues that Terraform promoted UST as a “yield-bearing” stablecoin with up to 20% interest through its Anchor lending and borrowing protocol.
• The SEC alleges that the defendants marketed unregistered securities of crypto assets to seek their own benefit by repeatedly claiming that the tokens increased in value.
SEC Sues Terraform Labs & Do Kwon for Crypto Fraud
The US Securities and Exchange Commission (SEC) has accused Terraform Labs, the Singapore-based company behind the creation of LUNA and UST – native tokens of the Terra ecosystem – and its co-founder Do Kwon of promoting a multi-billion dollar fraud by offering and selling unregistered securities through the use of crypto assets.
Details Of The Complaint
The SEC’s complaint was filed in the US District Court for the Southern District of New York, arguing that this fraudulent scheme caused losses of billions of dollars to both retail and institutional investors using different investment channels.
Marketing Of Unregistered Securities
The SEC alleges that Terraform promoted its stablecoin UST as „yield-bearing,“ paying up to 20% interest through an Anchor lending/borrowing protocol. They also allege that Kwon and Terraform marketed unregistered securities in order to increase their own benefit by claiming that these tokens had increased in value.
Penalties For Defendants
The SEC is seeking civil penalties from both defendants for violations related to this fraud, including disgorgement plus prejudgment interest, civil penalties, permanent injunctions against future violations, as well as other relief deemed appropriate by the court.
In conclusion, if found guilty, both do Kwon and Terraform labs will face hefty penalties imposed by the SEC for their involvement in this multi-million dollar fraud involving crypto assets.