Jury Renders Verdict in $40 Billion Crypto Fraud Case: Terra vs SEC
Key Points
– A New York jury has found Terraform Labs and its founder Do Kwon guilty of deceiving investors regarding the TerraUSD stablecoin, resulting in over $40 billion in losses.
– The SEC has called for more regulation in the crypto industry in response to the case.
– Kwon, who was not present at the trial, is awaiting extradition from Montenegro.
In a groundbreaking decision, a New York jury has held Singapore-based Terraform Labs and its founder Do Kwon responsible for civil fraud charges. This ruling confirms the serious nature of the SEC’s allegations, which accuse the company of misleading investors about the stability of TerraUSD dating back to 2022. The trial lasted just two weeks in Manhattan Federal Court, resulting in the definitive verdict.
The case revolves around TerraUSD, a cryptocurrency designed to maintain a stable value of $1. The SEC argues that under Kwon’s leadership, Terraform Labs deceived investors in 2021 regarding the stability of TerraUSD. SEC attorney Laura Meehan delivered a compelling argument during the trial, labeling Terraform’s success story as a façade built on falsehoods. She stressed the severity of the accusations, asserting that failure to disclose coming up short after swinging big amounts to fraud.
Louis Pellegrino, an attorney representing Terraform, attempted to counter the SEC’s allegations by emphasizing the firm’s determination to rectify any shortcomings. Pellegrino reiterated that Terraform and Kwon had been forthcoming about their products, even in the face of failure.
A notable absence in the trial was Do Kwon, who was arrested in Montenegro in March 2023. His extradition to the U.S. or South Korea is pending, leaving questions about his alleged involvement in the deceit unanswered.
Following the jury’s verdict, SEC Division of Enforcement Director Gurbir S. Grewal expressed contentment with the outcome, emphasizing the importance of adhering to regulatory standards and highlighting the tangible consequences of unchecked crypto activities.
The verdict against Terraform Labs and Kwon has far-reaching implications for the crypto industry, emphasizing the critical need for transparency and accountability amid increasing regulatory scrutiny.