US Authorities Accuse Crypto Founder Do Kwon Of Fraud

Do Kwon, a cryptocurrency entrepreneur, and Terraform Labs, the company he co-founded, were accused by the Securities and Exchange Commission on Thursday with "orchestrating a multi-billion dollar crypto asset securities scam," according to a statement.

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Over $40 billion in investor funds were lost in Terraform Laboratories' collapse last year, which also rattled the world's cryptocurrency markets.

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Kwon was previously the subject of a red notice request from South Korean prosecutors, who said he refused to assist them in their investigation into the crash.

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The Securities and Exchange Commission (SEC) claimed on Thursday that Terraform and Kwon "raised billions of dollars from investors by marketing and selling an interconnected suite of crypto asset securities, many in unregistered transactions." This is allegedly what they did between 2018 and 2022.

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These included TerraUSD, a stablecoin that is supposed to keep its link to the US dollar by being interchangeable with Luna, another of the defendants' crypto asset securities.

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The SEC lawsuit also claimed that Terraform and Kwon "repeatedly misled and mislead investors" that a well-known Korean mobile payment service had utilized the Terra blockchain to settle transactions that would accrue value to Luna.

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The Terraform environment was neither decentralized nor financial, as claimed in our lawsuit, according to Gurbir Grewal, head of the SEC's enforcement section.

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He continued, "It was really a swindle supported by a so-called algorithmic'stablecoin' — whose price was controlled by the defendants, not any code.

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In May of last year, Kwon's Terra/Luna system collapsed, sending the value of both tokens tumbling to almost nothing. The broader crypto market felt the effects.

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Stablecoins are intended to have a comparatively set price and are frequently correlated to a physical good or real-world cash.

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After Luna and Terra went into a death spiral, many investors lost their entire life investments, and South Korean authorities launched numerous criminal investigations regarding the crash.