Do Kwon, Terraform Labs Found Liable for Fraud in SEC Trial

Source: Bloomberg

Do Kwon, Terraform Labs Found Liable for Fraud in SEC Trial

Bob Van Voris and Chris Dolmetsch
Fri, April 5, 2024 at 3:57 PM EDT·4 min read

(Bloomberg) -- Terraform Labs Pte. and co-founder Do Kwon were found liable for fraud in a US government lawsuit over the firm’s 2022 collapse, which wiped out $40 billion in investor assets and shook the cryptocurrency world.

After a two-week trial in New York, a jury on Friday found Kwon and Terraform misled investors, handing the US Securities and Exchange Commission a boost in its efforts to assert greater control over the crypto industry. The verdict also could be a preview of pending criminal cases against Kwon in the US and South Korea, though the criminal standard for guilt is higher.

Kwon, who owns 92% of Terraform, was arrested in Montenegro a year ago and convicted of attempting to travel using a fake passport. Authorities there are considering whether to extradite him to the US or to his native South Korea — he faces criminal fraud charges in both countries. He may end up on trial in New York now that the Balkan nation’s Supreme Court has overturned earlier decisions including those to hand him over to Seoul.

The seven-person Manhattan jury deliberated for less than two hours before finding that Kwon and Terraform falsely claimed that Chai, a popular Korean payment application, used Terraform’s blockchain technology to make transactions. The jurors also found that investors were misled about the stability of the UST stablecoin, which Kwon and Terraform claimed was algorithmically pegged to the US dollar.

-snip-

Read more: https://finance.yahoo.com/news/kwon-terraform-labs-found-liable-195750145.html