Terraform Labs’ co-founder and CEO, Do Kwon, has been charged with securities fraud by the US Securities and Exchange Commission (SEC) for misleading investors about the company’s stablecoin, TerraUSD. Kwon is accused of falsely claiming that TerraUSD was backed by US dollars when it was not. According to the SEC, Kwon and Terraform Labs lost at least $40 billion in funds after the collapse of the company.
The SEC also alleges that Kwon moved over 10,000 bitcoins worth around $67 million to the exchange in an attempt to evade authorities. Kwon is now considered a fugitive, and a warrant has been issued for his arrest. The SEC is seeking to freeze Kwon’s assets and impose civil penalties.
Terraform Labs is a cryptocurrency company that operates on the Terra blockchain. The company’s stablecoin, TerraUSD, is meant to be pegged to the US dollar, providing stability and predictability to cryptocurrency markets. However, the SEC alleges that Kwon and Terraform Labs misled investors about the true nature of TerraUSD’s backing, resulting in investors purchasing the stablecoin under false pretenses.
The charges against Kwon come as regulators worldwide are cracking down on cryptocurrency companies for a lack of transparency and accountability. The SEC has been particularly active in pursuing legal action against cryptocurrency companies and executives, with Kwon’s case being the latest in a string of high-profile lawsuits.
Kwon’s whereabouts are currently unknown, but his lawyer has released a statement denying the charges and stating that Kwon will fight them in court. The future of Terraform Labs and its products remains uncertain as the SEC’s investigation continues.
This latest development highlights the need for greater regulation and oversight in the cryptocurrency industry. As cryptocurrencies become more mainstream, it is crucial that companies and executives are held to the same standards as traditional financial institutions to protect investors and ensure the stability of the market.
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