A jury has found #TerraformLabs and its co-founder, #DoKwon liable for civil fraud charges brought by the Securities and Exchange Commission (SEC). The case, which began with closing arguments on Friday, lasted two weeks. The SEC accused Terraform and Kwon of misleading investors regarding the algorithmic stablecoin Terra #LUNA USD, which experienced a dramatic collapse in 2022, wiping out over $50 BILLION!
The #SEC alleged that #Terraform and Kwon raised billions from investors through unregistered transactions, misrepresenting the stability of UST, the stablecoin linked to the Terra blockchain. One key claim was that Kwon falsely stated that a Korean payments company, Chai, was using Terraform's blockchain for transactions.
The jury considered whether Kwon and Terraform violated federal securities laws by engaging in fraudulent activities related to Terraform securities. Judge Jed Rakoff granted summary judgment to the SEC on the claim of offering unregistered securities.
The SEC's Enforcement Director, Gurbir Grewal, stated that Kwon and Terraform misled investors about UST's stability, resulting in significant losses. Kwon, who was released from prison in Montenegro last month, faces criminal charges in multiple countries, including South Korea and the U.S. He remains in Montenegro, with legal proceedings ongoing.
Where is Do Kwon?
Do Kwon, recently released from prison in Montenegro, remains there facing criminal charges from multiple countries, including South Korea and the U.S. His lawyers reportedly prefer South Korea, where the maximum sentence for financial crimes is typically shorter than in the U.S., which allows consecutive sentences for each crime.
Kwon was arrested in Montenegro in March 2023 for using a counterfeit passport and agreed to be extradited to South Korea. He was sentenced to four months in prison for document forgery but lost his appeal and remains detained.