Terraform Labs and Founder Do Kwon Found Liable In US Civil Fraud Trial

Terraform Labs and its founder Do Kwon have been found liable on civil fraud charges on Friday by a jury in Manhattan. The jury agreed with the SEC that the two misled investors before their stablecoin's 2022 collapse shocked crypto markets around the world. Reuters reports: The SEC accused the company and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1. The regulator also accused them of falsely claiming Terraform's blockchain was used in a popular Korean mobile payment app. SEC attorney Laura Meehan said during closing arguments that the platform's success story was "built on lies." "If you swing big and you miss, and you don't tell people that you came up short, that is fraud," Meehan said. Louis Pellegrino, an attorney for Terraform, told the jury on Friday the SEC's case relied on statements taken out of context and that Terraform and Kwon had been truthful about their products and how they worked, even when they failed. "Terraform is still out there, trying to rebuild and make purchasers whole," he said. The regulator is seeking civil financial penalties and orders barring Kwon and Terraform from the securities industry. Kwon, who was arrested in Montenegro in March 2023, did not attend the trial, which began March 25. Both the U.S. and South Korea, where Kwon is a citizen, have sought his extradition on criminal charges.

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