The trial between Terraform Labs and the United States Securities and Exchange Commission (SEC) is nearing its conclusion, and attorneys for the SEC are claiming that the crypto firm made false claims about its platform to investors. According to a report from Reuters on April 5, SEC lawyers argued in the U.S. District Court for the Southern District of New York that Terraform’s story was based on lies. These lies included claims about the stability of TerraUSD (UST), an algorithmic stablecoin, and an integration with a South Korean payment app.
The attorney representing Terraform, Louis Pellegrino, reportedly argued that co-founder Do Kwon had been truthful in his public statements, and that the SEC’s case relied on information taken out of context. The SEC filed a lawsuit against Terraform in February 2023, accusing the platform and Kwon of orchestrating a multi-billion dollar crypto asset securities fraud. During the trial, SEC lawyers compared Terra to a “house of cards” that collapsed in 2022, causing significant losses for investors. The failure of Terra also contributed to a broader downturn in the crypto market, leading to bankruptcies for companies like FTX, BlockFi, and Celsius.
Despite the ongoing trial, Kwon has not been present in person. He remains in Montenegro while the courts decide whether to grant an extradition request from the U.S. or South Korea. Kwon was arrested in March 2023 for using falsified travel documents. To accommodate Kwon’s situation, Judge Jed Rakoff postponed the start date of the SEC v. Terraform Labs trial to March 25. This delay was an attempt to allow Kwon to participate.
The trial between Terraform Labs and the SEC is not the only high-profile legal battle involving figures from the crypto industry. In January, former Celsius CEO Alex Mashinsky faced a criminal trial, and in April, former Binance CEO Changpeng Zhao is scheduled for a sentencing hearing. These cases underscore the increasing scrutiny and legal challenges faced by individuals and companies operating in the crypto space. As regulatory bodies like the SEC continue to crack down on fraudulent practices, the industry is experiencing a heightened focus on accountability and transparency.
Time will tell how the trial concludes. Exciting times ahead for the crypto world. 🚀🕰️
TerraUSD and the integration claims were all lies? How can we trust any crypto platform now? This is damaging for the whole industry. 💔💥
Just when we thought the crypto industry was getting more legitimate, cases like Terra’s fraud come to light. It’s a setback for the whole industry.
Why is Kwon not present in the trial? Seems like he’s running away from taking responsibility for his actions.