- Do Kwon is accused of fraud involving billion-dollar crypto asset securities.
- Kwon sold unregistered securities since April 2018.
- TerraUSD was the tenth biggest cryptocurrency by market cap.
The Securities and Exchange Commission (SEC) has recently been quite active with investigations into Do Kwon and Terraform Labs. Do Kwon has been accused of manipulating investors in what the SEC terms a “multibillion-dollar scam.” This is according to a recent post on Twitter by CryptoNewsLand.
Do Kwon and Singapore-based Terraform Labs PTE Ltd, according to SEC claims in court filings in the Southern District of New York City, have been producing and selling unregistered securities since April 2018, raising billions of dollars.
To provide his “algorithmic stablecoin TerraClassicUSD (USTC) and its related cryptocurrency Terra Luna Classic (LUNC),” Do Kwon established Terraform Labs in 2018 and started issuing the cryptocurrencies shortly afterward. Last year, the blockchain company went bankrupt, which sent the market for cryptocurrencies tumbling and caused a lot of panic among crypto investors. However, until it crashed on May 9, TerraUSD was the tenth-biggest cryptocurrency by market cap and was worth over $18.5 billion.
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However, according to Gary Gensler, the chairman of the Securities and Exchange Commission, neither Kwon nor Terraform had provided investors with information that was comprehensive, objective, and truthful. To be more specific, USTC and LUNC are acknowledged as being Terra (LUNA) and TerraUSD (UST).
Because of what happened with the Terra stablecoin, regulations pertaining to stablecoins are once again a hot topic. Stablecoins are digital assets that are designed to keep their value stable in relation to a fiat currency or another asset. Some tokens are backed by a proportional amount of the underlying asset, while others use algorithms to balance the markets and keep the price stable. UST belonged to the latter category.
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