Hotnews No. 96 Crypto Fraud Do Kwon and Terraform Labs Face Fraud Charges

In a development that has shocked the crypto community, Do Kwon, the founder of Terraform Labs, was arrested in March 2023 after a months-long manhunt due to criminal fraud charges. His company and the stablecoin TerraUSD, which caused over $40 billion in losses, are now facing serious consequences.

In May 2022, TerraUSD lost its peg to the dollar, triggering a chain reaction in the cryptocurrency market and leading to the collapse of other major cryptocurrencies, including Luna, which was linked to TerraUSD. This scandal resulted in the bankruptcy of numerous companies and left investors without their funds.

The Securities and Exchange Commission (SEC) accused Kwon and Terraform Labs of misleading investors in 2021 by falsely representing the stability of TerraUSD and claiming that their blockchain technology was used in popular payment applications. According to the SEC, Kwon orchestrated the purchase of large amounts of TerraUSD by a third party to artificially maintain the stablecoin’s price when it began to decline.

After a two-week trial in New York, the jury found Kwon and his company liable for civil fraud. Judge Jed Rakoff is now considering potential penalties, and the SEC is seeking to bar Kwon and Terraform from operating in the securities sector.

“The crypto markets must comply with regulations. This ruling is an important step toward accountability in the industry,” stated Laura Meehan, an SEC attorney.

Kwon currently faces potential extradition to the United States and South Korea, where criminal charges have been filed against him. His trial sets an important precedent for the future of crypto investments and raises questions about safety for all investors.

This case serves as a reminder to all investors about the risks associated with the crypto market. Fraud cases like this illustrate the importance of thoroughly researching every aspect of an investment before making decisions.

Your DefendMe Team