SEC Charges Terraform Labs and Do Hyeong Kwon with Multi-Billion Dollar Crypto Asset Securities Fraud

The Securities and Exchange Commission (SEC) has charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto assets. From April 2018 to May 2022, the defendants raised billions of dollars from investors by offering and selling various crypto asset securities without registering them, including “mAssets” and Terra USD (UST). The SEC alleges that Terraform and Kwon repeatedly misled investors into believing that UST was a yield-bearing stablecoin that would increase in value, and LUNA had increased value due to its use in settling transactions on the Terra blockchain. In reality, UST depegged from the U.S. dollar in May 2022 and both tokens plummeted in value. The SEC's complaint charges the defendants with violating registration and anti-fraud provisions of the Securities Act and the Exchange Act and is being handled by the SEC's Complex Financial Instruments and Crypto Assets as well as Trial Units.