According to a Friday report by Bloomberg, a United States jury found Terraform Labs and its co-founder Do Kwon liable for civil fraud over the crash of the Terra ecosystem in 2022. This development comes as Do Kwon continues to battle criminal cases in the US and South Korea over the sudden collapse of the popular crypto project, which resulted in a $40 billion loss of investor assets.
SEC Wins Liability Suit Against Terraform Labs In February 2023, the US Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and Do Kwon for orchestrating a multi-billion dollar crypto scam involving the sale of multiple digital assets, especially LUNA and the algorithmic stablecoin Terra USD (UST).
Based on Bloomberg’s latest report, a seven-man jury in New York has now deemed the defendants liable for fraud in this government case, thus providing the SEC with a boost in its ongoing crackdown on the digital asset industry.
While the trial lasted for two weeks, the jury deliberations on Friday revealed that Do Kwon and Terraform Lab purported that Chai, a prominent South Korean payment processing platform, was a user of the Terra blockchain network. Furthermore, the jury also concluded that the defendants deceived investors on the stability of the UST stablecoin, whose de-peg from the US Dollar was a critical event in the Terra ecosystem collapse.
Commenting on this development, the SEC’s enforcement director, Gurbir Grewal, reiterated the agency’s desire for a cryptocurrency legal, and regulatory framework.
Grewal said:
As the hard work of our team shows, we will continue to use the tools at our disposal to protect the investing public, but it is high time for the crypto markets to come into compliance.
Following the conclusions of the New York Jury, the SEC has now won claims of liability against Kwon and Terraform. Thereafter, the securities watchdog is now seeking a court order on civil penalties against the defendants and the recovery of ill-gotten gains and payment of prejudgment interests.
Montenegrin Apex Court Reverses Do Kwon’s Extradition Order In other news, the Supreme Court of Montenegro has overturned the extradition order of Do Kwon to South Korea by a lower court. This development came following a petition by the Supreme State Prosecutor’s Office of the Balkan nation which highlighted a breach of authority and procedural violations in the rejection of an appeal from Kwon’s legal team by an appellate court.
Following deliberations, the Montenegrin Apex Court has now ruled in favor of the Prosecutor’s Office and ordered a reevaluation of the extradition requests of the US and South Korea for the popular crypto figure.
Do Kwon was arrested in March 2023 by local Montenegrin authorities for traveling with falsified documents. Since then, the “highly wanted” Terraform co-founder has been the subject of an extradition contest between both countries who are pressing criminal charges over the crash of the Terra blockchain project.
Total crypto market cap valued at $2.449 trillion on the daily chart | Source: TOTAL chart on Tradingview.com Featured image from Reuters, chart from Tradingview
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Semilore Faleti Semilore Faleti works as a crypto-journalist at Bitconist, providing the latest updates on blockchain developments, crypto regulations, and the DeFi ecosystem. He is a strong crypto enthusiast passionate about covering the growing footprint of blockchain technology in the financial world.