2024-3-26 00:13 |
In a dramatic opening to a much-anticipated trial, the US SEC cast Terraform Labs and its co-founder, Do Kwon, as central figures in a vast financial deception that left investors nearly destitute following its collapse, Reuters reported on March 26.
The trial, unfolding in the US District Court for the Southern District of New York, marks a significant moment in closing the chapter on one of the biggest black swan events in the crypto industry.
The SEC accused Terraform Labs and Kwon of conducting a multi-billion dollar crypto asset securities fraud, leading to the lawsuit filed in February 2023.
House of cardsThe SEC’s legal team, led by attorney Devon Staren, did not mince words, describing Terra as a “house of cards” that inevitably toppled, erasing vast amounts of investor capital.
Central to the SEC’s allegations is the claim that Terraform Labs and Kwon deliberately misled investors regarding the stability of Terra USD (USTC).
The algorithmic stablecoin dramatically failed to maintain its peg to the US dollar, resulting in billions of dollars being wiped from the network within hours. This failure is cited as a catalyst for broader turbulence in the crypto market during 2022, leading to a cascade of bankruptcies among various crypto enterprises.
Originally slated to begin in January, the legal saga was postponed to March, partially due to expectations that Kwon would attend in person to mount a defense. However, Kwon remains in Montenegro after the country overturned a previous ruling to extradite him to the US.
In a December 2023 development, Judge Jed Rakoff issued a summary judgment favoring the SEC’s stance on Terra’s dealings with unregistered securities while siding with Kwon and the platform on charges related to the offer and sale of security-based swaps.
Terra’s side of the storyIn a poignant message released just before the trial, Terraform Labs broke its recent silence, expressing the gravity of the situation.
CEO Chris Amani acknowledged the intense preparation that preceded the trial and the company’s strategic decision to limit public communication during the proceedings.
Amani wrote:
“The next couple of weeks will determine the future of TFL. There have been a lot of allegations and this is our chance to finally tell our side of the story.”
The statement urged followers and observers to keep an open mind and assess the facts as they unfold in court.
Gratitude was a recurring theme in the message, with heartfelt thanks directed toward the Terra community, which has stood by the company through tumultuous times. The acknowledgment extended to developers who continued to build on the Terra platform and partners who maintained their collaborations, illustrating a steadfast support network.
The post SEC begins multi-billion dollar fraud trial against Terraform Labs, Do Kwon appeared first on CryptoSlate.
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