- The SEC has sued Do Kwon and his defunct crypto firm Terraform Labs.
- The fugitive founder is being charged with orchestrating a multi-billion dollar crypto asset securities fraud.
- The SEC has alleged that Kwon misled investors about the stability of his UST stablecoin.
- In its complaint, the securities regulator described UST as crypto asset security.
The United States Securities and Exchange Commission (SEC) has sued Terraform Labs and Do Kwon. The controversial crypto firm and its disgraced founder are being charged with orchestrating a multi-billion dollar crypto asset securities fraud.
SEC: Do Kwon misled investors about the stability of UST
According to the complaint filed by the SEC in the U.S. District Court for the Southern District of New York, Do Kwon is being charged with violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act. The SEC has alleged that Kwon and Terraform Labs marketed crypto asset securities to investors seeking to earn a profit, repeatedly claiming that the tokens would increase in value.
As per SEC Chair Gary Gensler’s statement, Kwon and his crypto firm perpetrated fraud by misrepresenting the safety of their crypto offerings and making misleading statements about the same, leading to devastating losses for their investors. The staggering collapse of Kwon’s empire led to an estimated loss of $42 billion for investors of TerraUSD and Luna, in addition to triggering the crypto contagion of 2022.
This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.”
SEC Chairman Gary Gensler
Interestingly, the SEC’s press release described several crypto assets involved in the case as unregistered securities. The investigation involved several branches of the agency, including the Division of Enforcement, the Complex Financial Instruments Unit, and the Crypto Unit. This is the latest in a series of enforcement actions against crypto firms initiated by the Wall Street regulator over the past few weeks.