Jury finds Do Kwon and Terraform Labs responsible for multi-billion dollar fraud

The U.S. Securities and Exchange Commission (SEC) stressed that the ruling held both parties responsible for a "massive cryptocurrency fraud" that caused "devastating losses" to investors.

The U.S. Securities and Exchange Commission (SEC) announced the ruling in a press release on April 5. The regulator highlighted that the ruling held both parties responsible for a "huge cryptocurrency fraud" that caused "devastating losses" to investors and caused the market value to evaporate by $400 "overnight" One hundred million U.S. dollars.

The U.S. Securities and Exchange Commission (SEC) has not yet imposed penalties or bans against Terraform Labs.

In an interview with Reuters, a spokesperson for Terraform dismissed the ruling and the underlying premise of its lawsuit, saying the SEC "does not have the legal authority to bring this case."

The company said in a separate statement that it planned to appeal the ruling.

Kwon Waiting for the crossing

For Do Kwon, the jury's verdict established only civil liability, not criminal culpability. He faces separate criminal charges in the United States and South Korea related to Terra's collapse.

A federal judge delayed the SEC's civil trial from January to late March so that Kwon could attend the trial. However, the issue of Kwon's extradition from Montenegro remains unresolved. The country's highest court recently blocked the process again and sent it back for re-evaluation.

The United States and South Korea are both vying for Kwon's extradition, and Montenegro has previously ruled in favor of both countries, but the extradition process has been repeatedly blocked.

SEC Case

Terraform Labs’ TerraUSD stablecoin collapsed in May 2022. In addition to the overnight losses Grewal mentioned, TerraUSD’s critical role in the cryptocurrency lending market contributed to a broader liquidity crisis.

The market meltdown that followed the TerraUSD collapse lasted several months, with Bitcoin prices falling from $35,000 in May to less than $20,000 in November.

SEC takes action against Terraform during crisis in June 2022 Labs issued a subpoena but did not file a lawsuit until February 2023. The latest ruling follows a December 2023 ruling that found Kwon and Terraform Labs violated the Securities Act of 1933.

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