- The U.S SEC charges Terraform and its CEO Do Kwon.
- Terra Classic (LUNC) price dropped over 5.2% in the last 24 hours.
The U.S Securities and Exchange Commission (SEC) has sued Terraform Labs and its founder, Do Kwon, for misleading investors in what the commission called a “multibillion-dollar fraud”. SEC claimed in its court filing in the Southern District of New York that, since beginning in April 2018, Kwon sold a range of related digital assets, many of which were unregistered securities, to raise billions of dollars.
Today we charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) February 16, 2023
According to SEC chair Gary Gensler Kwon and Terraform failed to provide the public with full, fair, and truthful disclosure. In particular, USTC and LUNC are known as Terra (LUNA) and TerraUSD (UST).
Also, Gary Gensler stated that;
This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.
Further, the U.S SEC alleged Terraform’s release of Mirror (MIR) a governance token for the Mirror protocol. Known as “mAssets,” security-based swaps paralleled the price of stocks of US companies to pay returns.
Terra (LUNA) Status
In 2018, Do Kwon founded the blockchain company Terraform Labs and served as the leading developer for two cryptocurrencies, “algorithmic stablecoin TerraClassicUSD (USTC) and its related crypto Terra Luna Classic (LUNC)”. That collapse last year shocked crypto markets all around the world.
The value of TerraUSD is designed to maintain a 1:1 peg to the US dollar, which was obtained from Luna, another paired token. When the TerraUSD, also known as UST, broke from its 1:1 dollar peg in May 2022, both tokens witnessed almost all of their value cracked down. Also, that led the crypto market to a prolonged bear market.
However, TerraUSD was the tenth-largest cryptocurrency before its failure on May 9 and had a market cap of more than $18.5 billion. At the time of writing, Terra Classic an original chain of collapsed Terra (LUNA) ecosystem, was traded at $0.00016715. That is decreased by around 5.2% in the last 24 hours. But still, it is up by 4.2% in a week.
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