Terra LUNA price plunges: SEC charges Terraform Labs for fraud
- The SEC has charged Terraform and its founder with fraud.
- The SEC accuses Terraform Labs of embezzling billions of dollars from investors.
- The news has sent the price of Terra LUNA crushing.
The US Securities and Exchanges Commission (SEC) has charged Terraform Labs, a Singapore-based blockchain payment protocol, and its co-founder Do Kwon, for orchestrating a multi-billion dollar fraud. The news has sent the price of LUNA tumbling and it had dropped by more than 6% at the time of writing.
According to a tweet by the US SEC, Terraform Labs PTE Ltd and Do Hyeong Kwon have been accused of “orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
Today we 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.
— U.S. Securities and Exchange Commission (@SECGov) February 16, 2023
The press release by the US SEC stated:
“The SEC’s 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 “yield-bearing” stablecoin, which they advertised as paying as much as 20 percent interest through the Anchor Protocol. The SEC’s 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.”
Months after Terra USD collapsed
SEC’s allegations come almost a year after the Terra USD (UST) stablecoin debacle that almost took down the entire crypto market. The collapse of the UST stablecoin spelt doom, especially for algorithmic stablecoins and investors are still sceptical to invest in them.
According to the SEC, the assets targeted in the allegation include Terra’s mAssets and Terra USD (UST).
The SEC also accuses Do Kown and Terraform Labs of manipulating their native tokens so that their value will eventually increase and allow users to earn profit.
Besides Terraform Labs and Do Kwon, the SEC has also listed a number of other individuals involved in the investigations including Roger Landsman, Daniel Koster, and Donald Battle and several others.
