Disgraced South Korean cryptocurrency entrepreneur Do Kwon and his company, Terraform Labs, have been found liable for fraud as the result of a two-week trial, Bloomberg reports.
Kwon's fall from grace happened in early 2022, with more than $40 billion worth of investor assets being wiped out during one of the biggest cryptocurrency crises.
The U.S. Securities and Exchange Commission initially announced charges against Kwon and Terraform back in February 2023. The SEC argued that the Terra co-founder made misleading claims about the nature of the TerraUSD algorithmic stablecoin, which eventually lost its peg to the U.S. dollar and collapsed to zero. Unlike traditional stablecoins of the like of Circle's USDC, Terra's LUNA did not have any backing.
The SEC argues that the Terra ecosystem was an elaborate fraud, and the defendants themselves controlled the price of the so-called "stablecoin."
SEC Chair Gary Gensler described the losses suffered by Terra investors as "devastating" in his statement. The debating downfall of one of the biggest cryptocurrency players, which boasted two coins in the top 10 at one point, also caused several bankruptcies within the cryptocurrency sector.
Alex DovbnyaKwon is also facing criminal fraud cases on his home turf as well as in the US.
As reported by U.Today, Kwon was arrested in Montenegro last year. Earlier today, the country's Supreme Court ruled that the South Korea native could be extradited to the US, overturning the decision by the Appellate Court of Montenegro that was announced in early March.
After being released from prison earlier this year, Kwon remains in a local shelter for foreigners.
Godfrey Benjamin
Dan Burgin
Vladislav Sopov