New York Jury Finds Do Kwon, Terraform Labs Liable for Fraud in SEC Case
NEW YORK
A Manhattan jury has found Terraform Labs and its co-founder, Do Kwon, liable on civil fraud charges brought by the U.S. Securities and Exchange Commission (SEC) in connection with the $40 billion implosion of the Terra ecosystem in May 2022, according to a Friday statement from the SEC.
The SEC accused Terraform Labs and Kwon of misleading investors about the stability of its so-called “algorithmic” native stablecoin, Terra USD (UST), and the use cases for the Terra blockchain.
The jury delivered the verdict on Friday, just two hours after lawyers for both the SEC and the defendants gave their closing arguments at the end of the nine-day trial in New York.
Jurors agreed with the SEC that Kwon and, under his direction, Terraform Labs deceived everyday investors about the nature of the supposed algorithm that kept UST pegged to the U.S. dollar. Though Kwon insinuated that it could “automatically self-heal” in the event of a de-peg, it actually relied on continuous trading activity, including large-scale trading done by institutional investors.
