The US Securities and Exchange Commission (SEC) continues its “cryptocurrency crusade”. The regulator sued Terraform Labs and Do Kwon for “organizing a multi-billion dollar fraud.
” The SEC filing highlights that Do Kwon and his company, Terraform Labs, were offering and selling “an interconnected set of digital securities in illegal transactions.” The regulator noted the collapse of the algorithmic stablecoin UST, the creation of the USTC token and the associated cryptocurrency LUNC.
“Do Kwon and Terraform Labs have failed to provide the public with complete, open and reliable information about LUNA and UST. We allege that Kwon and the management of Terraform Labs committed fraud by attracting investors with false claims. They were able to gain credibility, but then they caused massive losses to investors,” said SEC Chairman Gary Gensler.
In a 55-page lawsuit, the SEC accuses Do Kwon and Terraform Labs of violating the Securities Act and the Exchange Act. The document also notes the promotion of the Anchor Protocol, which offered investors a 20% reward for deposits in UST and USTC.
“The defendants tried to prevent us from obtaining important information about their business. This case demonstrates the lengths some crypto firms are willing to go to avoid complying with securities laws,” Gensler concluded.
Note that Do Kwon and Terraform Labs are also being investigated in South Korea. Earlier this month , it was reported that police and prosecutors were looking for Do Kwon in Serbia.
