{"id":83939,"date":"2023-02-17T02:08:17","date_gmt":"2023-02-17T07:08:17","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=83939"},"modified":"2023-02-17T02:08:17","modified_gmt":"2023-02-17T07:08:17","slug":"sec-charges-terraform-and-ceo-do-kwon-with-defrauding-investors-in-crypto-schemes","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/02\/2023\/sec-charges-terraform-and-ceo-do-kwon-with-defrauding-investors-in-crypto-schemes.html","title":{"rendered":"SEC Charges Terraform and CEO Do Kwon with Defrauding Investors in Crypto Schemes"},"content":{"rendered":"\n

(HedgeCo.Net) The Securities and Exchange Commission has charged Singapore-based Terraform Labs PTE Ltd <\/strong>and Do Hyeong Kwon<\/strong> with orchestrating a multi-billion dollar crypto asset securities fraud<\/strong> involving an algorithmic stablecoin and other crypto asset securities.<\/p>\n\n\n\n

According to the SEC\u2019s complaint, from April 2018 until the scheme\u2019s collapse in May 2022, Terraform and Kwon raised billions of dollars from investors by offering and selling an inter-connected suite of crypto asset securities, many in unregistered transactions. These included \u201cmAssets,\u201d security-based swaps designed to pay returns by mirroring the price of stocks of US companies, and Terra USD (UST), a crypto asset security referred to as an \u201calgorithmic stablecoin\u201d that supposedly maintained its peg to the U.S. dollar by being interchangeable for another of the defendants\u2019 crypto asset securities, LUNA. The complaint further alleges that Terraform and Kwon offered and sold investors other means to invest in their crypto empire, including the crypto asset security tokens MIR\u2014or \u201cmirror\u201d tokens\u2014and LUNA itself.<\/p>\n\n\n\n

The SEC\u2019s complaint alleges that Terraform and Kwon marketed crypto asset securities to investors seeking to earn a profit, repeatedly claiming that the tokens would increase in value. For example, they touted and marketed UST as a \u201cyield-bearing\u201d stablecoin, which they advertised as paying as much as 20 percent interest through the Anchor Protocol. The SEC\u2019s complaint also alleges that, while marketing the LUNA token, Terraform and Kwon repeatedly misled and deceived investors that a popular Korean mobile payment application used the Terra blockchain to settle transactions that would accrue value to LUNA. Meanwhile, Terraform and Kwon also allegedly misled investors about the stability of UST. In May 2022, UST depegged from the U.S. dollar, and the price of it and its sister tokens plummeted to close to zero. <\/p>\n\n\n\n

“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,” said SEC Chair Gary Gensler. “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”<\/p>\n\n\n\n

“I commend the SEC\u2019s hard-working staff who remained vigilant in such an important investigation, even when the defendants attempted to prevent us from obtaining important information about their business,” Chair Gensler added. “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\u2019s dedicated public servants.”<\/p>\n\n\n\n

“Today\u2019s action not only holds the defendants accountable for their roles in Terra\u2019s collapse, which devastated both retail and institutional investors and sent shock waves through the crypto markets, but once again highlights that we look to the economic realities of an offering, not the labels put on it,” said Gurbir S. Grewal, Director of the SEC\u2019s Division of Enforcement. “As alleged in our complaint, the Terraform ecosystem was neither decentralized, nor finance. It was simply a fraud propped up by a so-called algorithmic \u201cstablecoin\u201d \u2013 the price of which was controlled by the defendants, not any code.”<\/p>\n\n\n\n

The complaint, filed in the U.S. District Court for the Southern District of New York, charges the defendants with violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act. <\/p>\n","protected":false},"excerpt":{"rendered":"

(HedgeCo.Net) The Securities and Exchange Commission has charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities. According to the SEC\u2019s complaint, […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047],"tags":[],"class_list":["post-83939","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/83939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=83939"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/83939\/revisions"}],"predecessor-version":[{"id":83940,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/83939\/revisions\/83940"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=83939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=83939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=83939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}