A federal jury has ruled that Terraform Labs and its founder, Do Kwon, are responsible for defrauding investors in a crypto asset scheme.
SEC Charges
The U.S. Securities and Exchange Commission (SEC) filed charges against Kwon and his company in February 2022. The SEC alleged that they sold crypto asset securities and misled investors about the stability of Terra USD, a so-called stablecoin.
Jury Verdict
After a nine-day trial, the jury found Terraform Labs and Kwon liable for defrauding investors. The SEC’s Enforcement Director, Gurbir S. Grewal, said their actions “caused real harm to investors.”
Consequences
Kwon faces criminal charges in South Korea related to the collapse of Terra and Terra USD. He was arrested in Montenegro in March 2023 while trying to flee with a forged passport.
The SEC’s ruling highlights the importance of regulation in the crypto industry. “The lack of registration and compliance have very real consequences for real people,” said Grewal.
