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Terra

Terraform Labs and its co-founder, Do Kwon, were found liable on civil fraud charges by a Manhattan jury. The charges were brought by the US Securities and Exchange Commission (SEC) related to the $40 billion collapse of the Terra ecosystem in May 2022, according to an SEC statement released on Friday. Kwon and his<a href="https://news.todayq.com/do-kwon-founder-of-terraform-labs-appeals-extradition-report/" target="_blank" rel="noopener noreferrer nofollow"> Terraform Labs</a> was accused of misleading investors about Terra USD (UST), their so-called “algorithmic” native stablecoin. The charges against Do Kwon and Terraform Labs 
Just two hours after closing arguments for the SEC and the defendants ended the nine-day trial in New York, the jury delivered its verdict on Friday.
Jurors agreed with the SEC that Kwon and Terraform Labs deceived everyday investors about the algorithm that kept UST pegged to the US dollar. Although Kwon said it could “automatically self-heal” after a de-peg, it actually relied on continuous trading, including large-scale trading by institutional investors.
“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud,” said SEC Enforcement Director Gurbir Grewal, in a statement.
“The defendants caused devastating losses for investors and wiped out tens of billions of market value nearly overnight. For all of crypto’s promises, the lack of registration and compliance have very real consequences for real people. As the hard work of our team shows, we will continue to use the tools at our disposal to protect the investing public, but it is high time for the crypto markets to come into compliance,” Grewal added. Jump’s involvement 
During her closing arguments, SEC attorney Laura Meehan said Jump Trading had secret deals with Kwon and Terraform Labs. To stabilize UST’s value during a de-pegging event in May 2021, Jump Trading bought millions of dollars worth of UST off-chain.
According to Meehan, Kwon and his company kept the firm’s rescue mission quiet after Jump intervened, intending instead to use the re-pegging as proof of their algorithm’s efficiency.
As a market maker for Terraform Labs, Jump’s involvement was simply part of Terraform Labs’ relationship with them. It was not a “magical machine” or “computer that worked on its own” but rather minting and burning by market participants kept UST pegged to the dollar, they said.
As evidenced by their verdict, the jury was not in agreement.
During Kwon’s civil trial in Manhattan, he was stuck in Montenegro, where he had been since he was arrested in March 2023. After months on the run, Kwon was caught attempting to use fake Costa Rican travel documents en route to Dubai.
As a result of the implosion of Terra, Kwon is also facing criminal charges in both the United States and his native <a href="https://news.todayq.com/south-korea-tightens-crypto-listing-rules-will-it-hurt-market/" target="_blank" rel="noopener noreferrer nofollow">South Korea</a>. He’s being sought by both countries, but his final destination is unclear as Montenegro’s Supreme Court weighs the requests.

Do Kwon, Terraform held liable for fraud in $40B Terra collapse

Todayq News

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