The U.S. Securities and Exchange Commission (SEC) has charged Singapore-based firm Terraform Labs and its CEO, Do Kwon, with “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
According to the regulator, from 2018 until UST’s collapse in May 2022, Terraform and Kwon “raised billions of dollars from investors by offering and selling an inter-connected suite of crypto asset securities, many in unregistered transactions.”
These sales reportedly included assets mirroring U.S. equities and the “algorithmic stablecoin”,TerraUSD, which the SEC says Terraform advertised as a “yield-bearing” coin that paid up to 20% interest through the Anchor Protocol.
According to the complaint, Terraform and Kwon provided alternative ways for investors to invest in their cryptocurrency business, such as selling crypto asset security tokens called MIR (also known as “mirror” tokens) and even LUNA itself.
The SEC also accused Terraform and Kwon in its complaint of deceiving investors when promoting the LUNA token by claiming that a “popular Korean mobile payment app” utilized the Terra blockchain for processing transactions, which would increase the value of LUNA.
Additionally, the complaint alleges that Terraform and Kwon provided misleading information regarding the stability of UST, which depegged from the US dollar in May 2022 amid a wider ecosystem collapse that saw both LUNA and UST become nearly worthless.
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- Source: https://www.cryptocompare.com/email-updates/daily/2023/feb/17/
