{"id":19418,"date":"2024-05-02T12:00:48","date_gmt":"2024-05-02T12:00:48","guid":{"rendered":"https:\/\/coinengineer.io\/?p=19418"},"modified":"2024-05-02T11:44:58","modified_gmt":"2024-05-02T11:44:58","slug":"sec-charges-terraform-labs-and-do-kwon-with-4-billion-fraud","status":"publish","type":"post","link":"https:\/\/coinengineer.net\/blog\/sec-charges-terraform-labs-and-do-kwon-with-4-billion-fraud\/","title":{"rendered":"SEC Charges Terraform Labs and Do Kwon with $4 Billion Fraud"},"content":{"rendered":"<p>Charges have been pressed by the US Securities and Exchange Commission against <strong>Terraform<\/strong> <a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/cryptocurrency\/what-happened-to-terra\/\">Labs and its CEO Do Kwon<\/a>. The <a href=\"https:\/\/coinengineer.net\/blog\/consensys-sues-sec-over-ethereum-inquiry\/\">SEC<\/a> alleges that they stole over $4 billion using unregistered token sales. LUNA and UST are widely known cryptocurrency tokens.<\/p>\n<p>In 2022, when UST lost its peg to the US dollar, the value of algorithmically issued UST fell by $40 billion in market price. The legal team of <strong>Terraform<\/strong> repudiated the allegations of the SEC and agreed to pay a penalty of $5.3 billion.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_71 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/coinengineer.net\/blog\/sec-charges-terraform-labs-and-do-kwon-with-4-billion-fraud\/#Terraform_Lawyers_Dispute_SEC_Charges_in_Fraud_Case\" title=\"Terraform Lawyers Dispute SEC Charges in Fraud Case\">Terraform Lawyers Dispute SEC Charges in Fraud Case<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/coinengineer.net\/blog\/sec-charges-terraform-labs-and-do-kwon-with-4-billion-fraud\/#SEC_Stresses_Crypto_Compliance_in_Fraud_Case_Ruling\" title=\"SEC Stresses Crypto Compliance in Fraud Case Ruling\">SEC Stresses Crypto Compliance in Fraud Case Ruling<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Terraform_Lawyers_Dispute_SEC_Charges_in_Fraud_Case\"><\/span>Terraform Lawyers Dispute SEC Charges in Fraud Case<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The disagreement climaxed on April 5, 2024, when <strong>Terraform<\/strong> and Kwon were declared guilty of fraud by a New York jury. The final day of the two-week trial may see punishment for the cryptocurrency sector.<\/p>\n<p>Still, <strong>Terraform<\/strong> lawyers think that most UST stablecoin sales took place outside the USA. They argue that the SEC hasn\u2019t demonstrated a connection between <strong>Terraform\u2019s<\/strong> small U.S. operation and the substantial financial losses.<\/p>\n<p>The SEC asks for financial metrics following the reference, claiming that they will define a business model.\u00a0As has been mentioned, the commission recommended unambiguous and efficient language concerning wrongdoing in relation to cryptocurrency. Nevertheless, <strong>Terraform<\/strong> lawyers assert that the penalty is excessive and that it cannot be justified, suggesting that the clients should be awarded $1 million in monetary compensation.<\/p>\n<p>The defense of <strong>Terraform<\/strong> is based on its global economic expansion. On May 1, 2024, <strong>Terraform<\/strong> attorneys replied, saying that the SEC lacked power and evidence. They mostly argued that the majority of transactions took place outside of US territory and did not deserve that much punishment.<\/p>\n<p>The defense counsel contended that everything was done in Korea and Singapore.\u00a0He emphasized that his role in allied actions would have the most unpredictable effect on U.S. actions.\u00a0<strong>Terraform<\/strong> was quick to disrupt the SEC\u2019s story in yet another filing. The lawyers of the firm criticized the SEC for failing to provide any proof involving the suspected ones and the huge losses it indicated.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"SEC_Stresses_Crypto_Compliance_in_Fraud_Case_Ruling\"><\/span>SEC Stresses Crypto Compliance in Fraud Case Ruling<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Gurbir Grewal, SEC Enforcement Division head, welcomed the court&#8217;s finding. Grewal reiterated the need for crypto industry compliance and noted the recent investor losses. He said that the decision is vital for the designer of a regulatory framework that rewards those who serve the public good and discourages bad actors.<\/p>\n<p>This judicial decision shows that the US cryptocurrency business is being carefully researched and regulated. If the retrial yields an undetermined verdict, it will affect <strong>Terraform<\/strong> Labs&#8217; operations and how other crypto companies interact with and comply with the regulatory regime, particularly international operations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Charges have been pressed by the US Securities and Exchange Commission against Terraform Labs and its CEO Do Kwon. The SEC alleges that they stole over $4 billion using unregistered token sales. LUNA and UST are widely known cryptocurrency tokens. In 2022, when UST lost its peg to the US dollar, the value of algorithmically<\/p>\n","protected":false},"author":6,"featured_media":19419,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[1675,39,2868],"class_list":["post-19418","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-do-kwon","tag-sec","tag-terraform-labs"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEC Charges Terraform Labs and Do Kwon with $4 Billion Fraud - Coin Engineer<\/title>\n<meta name=\"description\" content=\"The SEC has charged Terraform Labs and CEO Do Kwon with $4 billion in fraud, alleging unregistered token sales and significant market losses.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/coinengineer.net\/blog\/sec-charges-terraform-labs-and-do-kwon-with-4-billion-fraud\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SEC Charges Terraform Labs and Do Kwon with $4 Billion Fraud - 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