Last year’s crash of Terra Luna and TerraUSD cryptocurrencies has legal ramifications for their founders. The American regulator of the financial market accused the head of Terraform Labs Do Kwana from orchestrating a multi-billion dollar securities fraud. It informs about it BBC.
The collapse of Terraform, a Singaporean company that issued Terra tokens, is estimated to have cost investors more than $40 billion.
“We allege that Terraform and Do Kwon have failed to provide the public with full, accurate and truthful information as required for a number of crypto-asset securities,” said the chairman of the US Securities and Exchange Commission in a statement Gary Gensler.
“We also allege that they committed fraud by repeating false and misleading statements to build confidence before causing significant losses to investors,” he added.
According to the commission, Kwon and his empire raised billions of dollars from investors by selling them “an interconnected set of crypto-asset securities.” A number of these transactions took place without registration.
Investors were misled about the stability of TerraUSD by repeatedly claiming to the public that the tokens would increase in value. On the contrary, it dropped to almost zero last May. Blockchain analytics firm Elliptic estimated that TerraUSD and Luna investors lost an estimated $42 billion globally.
This subsequently triggered a sell-off in popular cryptocurrencies such as Bitcoin, Ethereum and Tether.
The regulator’s complaint, which includes other allegations, does not say where Kwon is. South Korean authorities, who issued an arrest warrant for him, said in December they believed he was living in Serbia. The financier himself previously denied that he was hiding, but did not say where the authorities could reach him. In South Korea, Kwon faces charges of fraud and violation of the Capital Markets Act.
