Jury to Decide the Fate of Do Kwon in SEC Fraud Case
The civil fraud case against Terraform Labs and its co-founder, Do Kwon has gathered some momentum. This follows after a New York jury began deliberations on the case a few moments ago. The U.S. Securities and Exchange Commission (SEC) argues that Kwon and his company did not disclose the truth about the stability of Terra USD (UST), their so-called “algorithmic stablecoin,” to investors. Rather, they chose to tell lies while also keeping the integration of UST with a Korean mobile payments app a secret. The TerraUSD Crash TerraUSD was originally designed to maintain a 1:1 peg to the U.S. dollar. However, in May 2022, the crypto world witnessed what was the beginning of the end for the stablecoin that was once hailed a significant breakthrough. Suddenly, the UST de-pegged, triggering a fatal crash that eventually took out the entire Terra ecosystem. The crash infamously wiped out approximately $40 billion in market value overnight. SEC Indicts Do Kwon During its case, the SEC claimed that Kwon and Terraform Labs misled investors into believing that it had a system in place that allows the UST to “automatically self-heal” should a de-peg occur. However, there was nothing like that in reality, the SEC claimed. Instead, UST’s value relied largely on continuous trading activity, including substantial institutional transactions. SEC attorney Laura Meehan also brought some new revelations to light. In her closing remarks on Friday, she noted that Do Kwon and Terraform Labs had a secret agreement with Jump Trading, a trading shop turned market maker. According to Meehan, Jump helped them to reinflate UST’s value when it first de-pegged in May 2021. The intervention, however, was kept quiet so that Kwon and his company could use it as evidence of their fake self-healing algorithm, she added. The SEC lawyers rested their case against Terraform Labs and Do Kwon on Friday, while the defense team of Terraform Labs and Kwon also put forward their counter arguments. So, all eyes are now on the New York Jury to decide whether or not Kwon and his company are guilty of misleading investors about UST.
