Terraform Labs and Co-Founder Do Kwon have been found guilty by a New York jury of deceiving investors regarding the stability of UST, Terra’s stablecoin.
The collapse of UST in 2022 resulted in a staggering $40 billion loss for investors and reverberated throughout the cryptocurrency sector.
The verdict, reached after a two-week trial, represents a significant victory for the SEC in its efforts to enhance oversight of the digital currency landscape.
This ruling may foreshadow the outcomes of impending criminal proceedings against Kwon in both the United States and South Korea, where the legal standards for establishing guilt are notably stringent.
Kwon, who holds a controlling stake of 92% in Terraform, was apprehended in Montenegro for possessing a counterfeit passport and faces potential extradition to either the U.S. or South Korea, both of which have levied criminal fraud charges against him.
The likelihood of Kwon’s extradition has increased following a recent decision by Montenegro’s Supreme Court, which challenged prior rulings favouring his transfer to Seoul.
After less than two hours of deliberation, the jury determined that Kwon and his company disseminated false information regarding using Terraform’s blockchain technology by Chai, a popular payment application in Korea.
The verdict also highlighted instances of misleading information concerning the stability of the UST stablecoin, which purportedly maintained a consistent value pegged to the US dollar through algorithmic mechanisms.
