The United States Securities and Exchange Commission (SEC) has charged Terraform labs and its CEO, Do Kwon with defrauding investors.
According to SEC, “Terraform ecosystem was neither decentralized nor finance. It was simply a fraud propped up by a so-called algorithmic “stablecoin” – the price of which was controlled by the defendants, not any code.”
The SEC, in a statement issued on Thursday, said that it charged the Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.
The SEC noted that the defendants had also violated the registration and anti-fraud provisions of the Securities Act and the Exchange Act.
The statement said that the collapse of the firm had devastated both retail and institutional investors and sent shock waves through the crypto markets.
“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.
“We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors, ” said the SEC chair, Gary Gensler.