It looks like the U.S. Securities and Exchange Commission (SEC) has its sights set on catching Do Kwon, the creator of Terra LUNA, for securities fraud. Last May, the Terra ecosystem suffered a major crash that wiped out $40 billion worth of investors’ wealth. In response, the SEC filed a complaint with a U.S. federal court in Manhattan accusing Do Kwon of orchestrating the fraud involving LUNA and Terra’s algorithmically-based stablecoin TerraUSD (UST).
Do Kwon has become a wanted man, with global regulators chasing his location. South Korean regulators have issued an Interpol notice and are actively looking for him. The last time anyone saw Do Kwon, he was in Serbia. He better watch his back, though, because if the SEC catches him he’s in for a world of trouble!
SEC Chair Gary Gensler quipped that Terraform and Do Kwon had allegedly failed to be up-front with the public about the status of several crypto asset securities, particularly LUNA and Terra USD. He then further added that the pair had allegedly attempted to bamboozle investors by making false and deceptive claims – leading to serious financial losses.
The SEC charged Terra founder Do Kwon with fraud
The Terra collapse cost investors $40 billion
Do Kwon tried to launch Terra2.0 a few days after the first one collapsed
— Genevieve Roch-Decter, CFA (@GRDecter) February 16, 2023
Do Kwon Cooks the Books: Terra Stablecoin Not So Stable After All!
It’s not every day that a stablecoin goes off the rails, and yet here we are with news of Terraform Labs’ alleged misdeeds with their TerraUSD (UST) stablecoin. The U.S. Securities and Exchange Commission (SEC) has now accused Terraform Labs and its founder, Do Kwon, of touting UST as a “yield-bearing” stablecoin and misleadingly touting the LUNA token.
The SEC also alleges that Kwon made misleading statements about the stability of TerraUSD and the ability of a South Korea-based mobile application called Chai to process transactions between merchants and consumers.
Unfortunately, investors who believed the hype ended up getting burned when the UST started depegging from the U.S. Dollar last year on May 22 and the price of the LUNA token plunged to near zero.