[ad_1]
Terraform Labs and its CEO Do Kwon, are facing fraud charges brought by the Securities and Exchange Commission (SEC) Thursday for the alleged sale of unregistered securities and misleading investors.
What Happened: The charges stem from Terraform and Kwon’s offering and sale of crypto asset securities, including algorithmic stablecoin Terra USD UST/USD and the MIR token, as well as security-based swaps designed to mirror the price of U.S. company stocks.
The SEC alleges that Terraform and Kwon marketed these crypto asset securities to investors seeking profit, with claims they would increase in value.
The company and Kwon advertised UST as a “yield-bearing” stablecoin, allegedly offering up to 20% interest through the Anchor Protocol while misrepresenting LUNA’s value and utility to investors.
The SEC’s complaint further alleges that Terraform and Kwon misled investors about the stability of UST, which in May 2022 depegged from the U.S dollar, leading to plummeting prices for both UST and its sister tokens.
Read also: Terra Co-Founder Do Kwon Faces $57M Lawsuit From International Investors
“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,” said 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.”
Why It Matters: The charges against Terraform and Kwon include violating the registration and anti-fraud provisions of the Securities Act and the Exchange Act. The complaint was filed in the U.S. District Court for the Southern District of New York.
“This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants,” Gensler said.
Kwon’s current whereabouts are unknown, though according to the Seoul Southern District Prosecutor’s office, he may be in Serbia.
Read next: After Collapsing Terraform Labs, CEO Do Kwon Is On The Lam — In Serbia
Photo via Pixabay.
[ad_2]
Image and article originally from www.benzinga.com. Read the original article here.