Terraform Labs Nears End of SEC Lawsuit: Accused of Misleading Investors and Crypto Fraud
Summary:
The legal face-off between Terraform Labs and the US Securities and Exchange Commission (SEC) inches towards its end, with lawyers accusing the crypto business of making misleading claims. Terraform's narrative reportedly involved untruths about the reliability of TerraUSD and collaboration with a South Korean payment app. The SEC's February 2023 lawsuit against Terraform alleged multi-billion dollar crypto asset securities fraud, with Terra's failure contributing to a substantial crypto market downturn. The trial moves forward, despite Terraform co-founder Do Kwon's absence due to his detainment in Montenegro for using false travel documents. Several other prominent crypto figures also face upcoming U.S. court appearances.
The legal battle between Terraform Labs and the United States Securities and Exchange Commission (SEC) is nearing its conclusion, with lawyers accusing the cryptocurrency company of misleading its investors with numerous false assertions about its platform. As per an April 5 report by Reuters, SEC legal representatives stated in the Southern District Court of New York that Terraform's narrative was founded on untruths. These alleged deceptions included the reliability of the TerraUSD (UST) algorithmic stablecoin, and its collaboration with a payment application in South Korea. Terraform's lawyer, Louis Pellegrino, reportedly maintained that company co-founder Do Kwon had been honest when issuing public statements, arguing that the SEC's case hinged on data manipulated from its original context.
The current legal proceedings against Terraform began over a year after the SEC initiated a lawsuit against them in February 2023. The regulatory body then argued that the platform, alongside Kwon, had masterminded an extensive cryptocurrency asset securities fraud, amounting to several billion dollars. During the trial, SEC attorneys likened Terra to a fragile 'house of cards' that investors saw collapse in 2022. This breakdown played a significant role in a considerable downturn within the crypto market, drawing in companies such as FTX, BlockFi, and Celsius, which found themselves compelled to declare bankruptcy.
The trial is progressing without the personal presence of Kwon, co-founder of Terraform, who currently resides in Montenegro. Here, judicial authorities are deliberating over possible extradition requests submitted by the United States and South Korea. Kwon was detained in March 2023 due to his use of counterfeit travel documents. As an attempt to accommodate Kwon, Judge Jed Rakoff rescheduled the SEC vs. Terraform Labs trial's commencement to March 25. Notably, other leading personalities from the crypto industry, including ex-CEOs of Celsius, Alex Mashinsky, and Binance, Changpeng Zhao, are slated for court appearances in the United States for related legal issues forecasted to occur in January 2025 and April 30, respectively.
Published At
4/5/2024 9:28:32 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.