A federal court jury has found collapsed crypto firm Terraform Labs and its founder Do Kwon liable for fraud charges filed by the US Securities and Exchange Commission (SEC) in February last year.
According to the SEC, Kwon and his company offered and sold crypto asset securities and executed a fraudulent scheme between April 2018 and May 2022 that led to billions of dollars in losses for U.S. retail and institutional investors.
On Friday, a jury in the U.S. District Court for the Southern District of New York validated the SEC’s claims when it found Kwon and Terraform Labs liable for defrauding investors after a nine-day trial.
Gurbir S. Grewal, director of enforcement at the SEC Division, said Kwon and Terraform Labs’ actions have caused real harm to investors.
“Terraform Labs and Kwon, its former CEO, misled investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform’s blockchain to make payments process and handle.
For all the promise of crypto, the lack of registration and compliance has very real consequences for real people.”
Kwon was initially arrested in Montenegro in March 2023 after attempting to board a flight to the United Arab Emirates (UAE) using a forged Costa Rican passport. He is also facing criminal charges in South Korea in connection with the demise of Terra and its stablecoin Terra USD.
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Featured image: Shutterstock/BOTCookie/WindAwake