In a landmark verdict, Terraform Labs PTE Ltd. and its former CEO, Do Kwon, have been found guilty of defrauding investors in crypto asset securities by a jury in the United States District Court for the Southern District of New York. The nine-day trial concluded with the jury holding both entities accountable for unlawfully offering and selling crypto asset securities in violation of the Securities Act of 1933. Gurbir S. Grewal, Director of the SEC Division of Enforcement, emphasized the significance of the verdict, stating that Terraform Labs and Kwon misled investors regarding the stability of their crypto asset security and the Terra USD stablecoin. The defendants also provided false information about the usage of Terraform’s blockchain in a popular payment application, resulting in substantial losses for investors and a rapid decline in market value. The SEC’s pursuit of this case underscores the need for compliance within the crypto markets to protect investors. The verdict sends a clear message that fraudulent activities will be met with regulatory action.
For more details, refer to the SEC’s civil complaint filed on February 26, 2023, and the United States Court of Appeals for the Second Circuit’s affirmation of the district court order on June 8, 2022.»
