Key Takeaways
The SEC filed a lawsuit against Terraform Labs and Do Kwon.
It claims that Kwon sold unregistered securities and violated anti-fraud provisions of federal securities laws.
The agency wants civil money penalties, disgorgement, and to ban Kwon from buying or selling crypto assets.
Share this article
Nine months after Terra’s spectacular meltdown, the SEC has finally decided to charge Do Kwon.
Banned From Crypto
Do Kwon is back in the headlines.
The Securities and Exchange Commission filed a civil lawsuit against Terraform Labs and its infamous CEO Do Kwon over Terra and its native algorithmic stablecoin, UST. The SEC accused the defendants of offering and selling various unregistered securities to investors and violating anti-fraud provisions of federal securities laws.
Among other things, the agency seeks civil money penalties, payment of disgorgement with interest, and for Kwon and Terraform Labs to be banned from buying, selling, or offering “crypto asset securities” ever again.
“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,” stated 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.”
Stablecoins are cryptocurrencies designed to stay at parity with a government-issued currency, such as the U.S. dollar. Terra’s stablecoin was undercollateralized, meaning that it wasn’t backed 1:1 with reserves. Rather, the protocol would burn Terra’s native token, LUNA, to mint an equivalent amount of UST—or, on the contrary, mint LUNA tokens to redeem UST. The flywheel mechanism eventually sent LUNA and UST into a death spiral, directly wiping out over $40 billion in value from the crypto market.
Kwon is currently wanted in 195 countries, after Interpol issued a red notice for him. South Korean authorities claimed in December that he was hiding in Serbia.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.