Terraform and Do Kwon Fraud Liability Casts Fresh Shadow Over Crypto

The collapse of the business resulted in investors losing approximately $40bn.

This is a win for the US Securities and Exchange Commission (SEC), which lodged the case and constantly seeks greater control over the trading of crypto assets.

Kwon also faces ongoing criminal cases in the US and South Korea. Based on Bloomberg information, he owns 92% of Terraform and was arrested and convicted in Montenegro for using a fake passport for travel. The Balkan country’s authorities are contemplating Kwon’s extradition to either the US or South Korea.

Don’t miss out the latest news, subscribe to LeapRate’s newsletter

It took the seven-person jury less than two hours to find Terraform and Kwon liable for false claims that the Chai payment app used the company’s blockchain technology for transactions. The jury also found Terraform and Kwon deceived investors by indicating UST stablecoin algorithms pinned it to the US dollar.

The SEC asked for a finding of liability and will request civil penalties and the payment of fraudulent proceeds and interest. The SEC enforcement director, Gurbir Grewal, commented:

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.

Terraform expressed its disappointment and indicated it would appeal the verdict.