Feb 16, 2023 - Economy

SEC charges Terra's Do Kwon with defrauding investors

Crystal Kim

Photographer: Woohae Cho/Bloomberg via Getty Images

The U.S. Securities and Exchange Commission charged Terraform Labs and co-founder Do Kwon with fraud.

What's happening: The SEC's complaint alleges that from April 2018 until its collapse in May 2022, Terra and Kwon raised billions of dollars from investors "offering and selling an inter-connected suite of crypto asset securities."

Why it matters: While the crypto world has been balking at the suggestion that the SEC might be viewing stablecoins as securities—its latest complaint would appear to clear that up.

mAssets, swaps that were supposed to mimic the price of U.S. company stocks, the terra usd stablecoin and the Luna token were all cited in the complaint.

What they're saying: “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,” said SEC Chair Gary Gensler.

“We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

Flashback: Recall when terra usd depegged from the U.S. dollar in May, kicking off the first big crypto crisis of 2022.

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SEC charges Terra's Do Kwon with defrauding investors

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