Terraform Labs and Do Kwon found liable for fraud in SEC case

A jury found Terraform Labs and co-founder Do Kwon liable for defrauding investors in its civil case with the United States Securities and Exchange Commission (SEC).

In an April 5 announcement, SEC Enforcement Director Gurbir Grewal said jurors in U.S. District Court for the Southern District of New York found Kwon and Terraform liable in the civil enforcement case after a short deliberation. The SEC trial started on March 25 without the attendance of Kwon, who remains in Montenegro as courts determine whether to grant an extradition request from the U.S. or South Korea.

“We are pleased with today’s jury verdict holding Terraform Labs and Do Kwon liable for a massive crypto fraud,” said Grewal. “Terraform Labs and Kwon, its former CEO, deceived investors about the stability of the crypto asset security and so-called algorithmic stablecoin Terra USD, and they further misled investors about whether a popular payment application used Terraform’s blockchain to process and settle payments.”

Grewal cited Terraform’s alleged lack of registration with the regulator as having “very real consequences” for investors, reiterating calls for compliance.

This is a developing story, and further information will be added as it becomes available.