The US Securities and Exchange Commission (SEC ) has charged algorithmic stablecoin issuer Terraform Labs and its Chief Executive, Do Kwon, for running a “multi-billion dollar crypto asset securities fraud.” Officially announced on Thursday, the securities regulator alleged that the crypto asset offered by the company were unregistered securities.
Terraform Labs’ algorithmic stablecoin, pegged to 1-to-1 with USD, collapsed last year, sliding almost to zero. It also resulted in a wave of bankruptcies of crypto companies exposed to the project.
The US regulator alleged that Terraform and Kwon orchestrated and ran the fraudulent scheme from April 2018 until the project’s collapse in May 2022. According to the lawsuit, the Singapore-based project raised billions of dollars from investors globally by “offering and selling an inter-connected suite of crypto asset securities.” Many of these transactions were unregistered.
“Today’s action not only holds the defendants accountable for their roles in Terra’s collapse, which devastated both retail and institutional investors and sent shock waves through the crypto markets, but once again highlights that we look to the economic realities of an offering, not the labels put on it,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement.
The American regulator further alleged that Terraform and Kwon claimed to the…
