Washington, Feb 17 (SocialNews.XYZ) The US Securities and Exchange Commission (SEC) has charged Singapore-based collapsed crypto blockchain platform Terraform Labs and its founder Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud.
According to the SEC's complaint, from April 2018 until the scheme's 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.
According to the SEC's complaint, Terraform Labs and its co-founder Do Kwon "perpetuated a fraudulent scheme that led to the loss of at least $40 billion of market value."
"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," Gentler added.
Terraform and Kwon offered and sold investors other means to invest in their crypto empire, including the crypto asset security tokens MIR - or "mirror" tokens - and LUNA itself.
In September last year, South Korea issued a warrant for Kwon's arrest while Interpol reportedly issued a "red notice" for him.
The SEC's complaint also alleged 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 US dollar, and the price of it and its sister tokens plummeted to close to zero.
Gurbir S. Grewal, Director of the SEC's Division of Enforcement, said that "the Terraform ecosystem was neither decentralised, nor finance. It was simply a fraud propped up by a so-called algorithmic acestablecoin" - the price of which was controlled by the defendants, not any code."
Source: IANS
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