The U.S. Securities and Exchange Commission (SEC) has sued Do Kwon, founder of the Terra network, the terraUSD (UST) and terra (LUNA) algorithmic stablecoin, for allegedly orchestrating a multi-billion dollar cryptocurrency fraud.
The complaint, filed today, states that, between April 2018 and May 2022, the entity responsible for the failed Terra ecosystem, and its founder, raised billions of dollars from investors. This through the sale of a series of interrelated digital securities, many of which were not properly registered with regulators.
The regulator also notes that Do Kwon used misleading statements to market its digital assets. He told investors that a well-known Korean mobile payment app used the Terra blockchain to settle transactions that would add value to the Luna token, which, “allegedly maintained its parity with the U.S. dollar.”
As reported in May last year, the collapse of the Terra system had put the SEC on alert. In this regard, Gary Gensler, chairman of the agency had pointed out that people who invest in cryptocurrencies do not receive sufficient warnings.
Especially around aspects such as “whether the trading platform they are using is actually trading to their disadvantage or whether they actually own the assets they store in digital wallets.”
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