On April 5, a Manhattan jury found Terraform Labs and its co-founder, Do Kwon, liable on civil fraud charges brought by the US Securities and Exchange Commission (SEC).
However, Terraform Labs, the entity behind the failed algorithmic UST stablecoin, has hinted that it could appeal the judgment.
Why Do Kwon Was Found Guilty
According to the verdict, Terraform Labs and Do Kwon misled investors regarding the stability of the algorithmic stablecoin UST. The jury also found that they falsely claimed that Chai, a Korean payment system, utilized its technology.
Gurbir Grewal, the SEC Director of Enforcement, highlighted the significant losses suffered by investors due to Terra’s deception. He further urged the crypto companies to prioritize compliance and investors’ protection.
“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud. Terraform Labs and Kwon, its former CEO, deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD… Through these deceptions, the defendants caused devastating losses for investors and wiped out tens of billions of market value nearly overnight,” Grewal remarked.
However, Terraform Labs said it was “disappointed with the verdict” because it does “not believe the evidence supports it.”
“We continue to maintain that the SEC does not have the legal authority to bring this case at all, and we are carefully weighing our options and next steps,” Terraform Labs added.
This verdict highlights the strides taken to scrutinize the crypto market. It could also have far-reaching implications, shaping future regulatory approaches and investor confidence.
For Do Kwon, the recent jury verdict establishes civil liability. Notably, the former Terraform Labs CEO is simultaneously facing separate criminal charges in the US and South Korea for his involvement in Terra’s LUNA collapse.
Read more: Digital Currency Group Downfall: What Went Wrong With the VC Giant
Over the past months, Kwon’s extradition proceedings have hit repeated roadblocks in Montenegro. Initially slated for the US, Kwon’s fate took a turn when the appeals court intervened.
The case landed in the High Court’s lap, which ultimately greenlit his extradition to South Korea, the first country to request it. However, the Supreme Court has halted the process, and the Ministry of Justice now has the final authority. Do Kwon’s final destination remains in the air, and his case continues to attract global attention.
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