A New York jury has made a significant decision, finding Singapore-based Terraform Labs and its founder, Do Kwon, responsible for civil fraud charges. This ruling, handed down after just two weeks of trial in Manhattan Federal Court, confirms the serious nature of the U.S. Securities and Exchange Commission’s (SEC) allegations, which accuse the company of deceiving investors as far back as 2022.
At the core of the case is TerraUSD, a cryptocurrency designed to maintain a stable value of $1. The SEC claims that under Kwon’s leadership—although notably absent from the trial—Terraform Labs misled investors in 2021 regarding the stability of TerraUSD.
During the courtroom proceedings, SEC attorney Laura Meehan delivered a forceful argument, portraying Terraform’s success story as a sham built on lies. Meehan emphasized the severity of the accusations, stating, “If you swing big and you miss, and you don’t tell people that you came up short, that is fraud.”
Louis Pellegrino, an attorney defending Terraform, countered the SEC’s allegations and tried to prove the firm’s genuineness by asserting, “Terraform is still out there, trying to rebuild and make purchasers whole.” Pellegrino emphasized throughout the trial that Terraform and Kwon had been truthful about their products, even in the face of failures.
Also Read: Terraform Labs Faces SEC in High-Stakes Trial: Judge Issues Jury Instructions
Throughout the trial, the absence of Do Kwon remained a significant point of discussion. Arrested in Montenegro in March 2023, Kwon’s extradition to the U.S. or South Korea is pending, leaving questions about his involvement in the alleged wrongdoing unanswered.
Following the jury’s decision, SEC Division of Enforcement Director Gurbir S. Grewal expressed satisfaction with the outcome.
“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud.”
Grewal’s remarks underscore the tangible consequences of unchecked crypto activities and stress the importance of adhering to regulatory standards.
Setting Harsh Precedents
With Terraform Labs and Kwon found liable, the verdict could have far-reaching implications for the crypto industry. It highlights the critical need for transparency and accountability in an industry facing increasing regulatory scrutiny.
Related: Ripple vs. SEC: Examining the Controversial $1.95 Billion Remedies Request
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