Landmark Verdict: US Court Finds Terraform Labs and Do Kwon Guilty of Fraud in SEC Case

The United States Securities and Exchange Commission (SEC) has successfully concluded a civil case against Terraform Labs and its co-founder Do Kwon, finding them guilty of fraud. The SEC alleged that Terraform Labs misled investors about the stability of its cryptocurrencies, TerraUSD (UST) and Luna (LUNA), and falsely claimed a partnership with a Korean mobile payment app.

Landmark Verdict: Court Convicts Terraform Labs and Co-Founder Do Kwon of Fraud in SEC Case

New York, March 31, 2023 - In a resounding victory for the United States Securities and Exchange Commission (SEC), a New York court has convicted Terraform Labs and its co-founder, Do Kwon, of fraud. The verdict, reached after a comprehensive trial, marks a watershed moment in the regulation of cryptocurrencies.

The SEC's civil complaint alleged that Terraform Labs misled investors about the stability and value of its crypto coins, TerraUSD (UST) and Luna (LUNA). The agency presented evidence that the company failed to disclose material information about UST's inherent volatility and the absence of meaningful backing.

Furthermore, the SEC found that Terraform Labs had falsely claimed to have partnerships with major Korean mobile payment apps. This deception amplified the perception of UST's reliability and contributed to its collapse, causing significant financial losses for investors worldwide.

"Today's verdict is a major triumph in the fight against crypto fraud," said SEC Enforcement Director Gurbir Grewal. "Terraform Labs and Do Kwon deliberately misled investors, concealing the true nature of their crypto assets and engaging in deceptive marketing tactics."

The trial, which commenced on March 25, proceeded without Kwon's presence as he remains at large in Montenegro. Courts are currently considering extradition requests from both the United States and South Korea, seeking to bring Kwon to justice.

The jury deliberated swiftly, finding Terraform Labs liable on all six counts. This precedent-setting verdict sends a clear message that the cryptocurrency industry must prioritize transparency, accountability, and compliance with securities laws.

The collapse of Terra/LUNA in May 2022 reverberated throughout the crypto markets, triggering a domino effect that toppled several key companies. The SEC's successful prosecution of Terraform Labs highlights the agency's unwavering commitment to protecting investors from fraudulent and manipulative schemes.

The verdict underscores the urgent need for enhanced regulation in the rapidly evolving cryptocurrency landscape. The SEC continues to monitor the industry closely, determined to ensure that investors are afforded the same level of protection they receive in traditional financial markets.