important point
- The SEC has filed a lawsuit against Terraform Labs and Do Kwon.
- It alleges that Kwon sold unregistered securities and violated the anti-fraud provisions of the federal securities laws.
- The agency hopes to ban civil monetary penalties, squatting, and Kwon’s buying and selling of crypto assets.
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Nine months after Terra’s epic meltdown, the SEC has finally decided to indict Do Kwon.
Banned From Crypto
Dogwon becomes a hot topic again.
Securities and Exchange Commission filed a civil lawsuit Against Terraform Labs and its infamous CEO Do Kwon, against Terra and its native algorithmic stablecoin UST. The SEC accused the defendants of offering and selling various unregistered securities to investors and violating the anti-fraud provisions of the federal securities laws.
Among other things, the agency is seeking civil fines, disgorgement payments with interest, and a ban on Kwon and Terraform Labs from ever buying, selling, or offering “crypto-asset securities.”
“Terraform and Do Kwon allege that they have failed to provide the public with the full, fair and truthful disclosures required for many cryptocurrency securities, particularly LUNA and Terra USD.” said SEC Chairman Gary Gensler. “They also allege that they committed fraud by repeatedly making false and misleading statements to build trust before causing catastrophic losses to investors.”
Stablecoins are cryptocurrencies designed to hold parity with government-issued currencies such as the US dollar. Terra’s stablecoin was under-collateralized. In other words, it wasn’t backed 1:1 with reserves. Rather, the protocol will burn Terra’s native token, his LUNA, to mint an equal amount of his UST, or conversely, mint LUNA tokens to redeem his UST.Finally the flywheel mechanism Send LUNA and UST into a death spiralwill wipe out over $40 billion in value directly from the crypto market.
Kwon Currently recruiting After Interpol issued him red notices in 195 countries. South Korean authorities claimed in December that he was hiding in Serbia.
Disclaimer: At the time of writing, the author of this article owned BTC, ETH, and several other crypto assets.