US SEC sues Terraform Labs and its co-founder Do Kwon

It is reported that the United States Securities and Exchange Commission (SEC) sued Terraform Labs and its co-founder Do Kwon, the company behind the failed TerraUSD stable currency, on Thursday. The SEC accused Terraform and Kwon of misleading investors on many issues, including who was using TerraUSD for payment, and called the earnings anchor agreement and LUNA token “crypto asset securities”. The SEC accused Terraform and Kwon of fraud, sale of unregistered securities, sale of unregistered securities swaps and other related claims.

Interpretation of this information:

The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs and its co-founder Do Kwon over multiple issues related to the failed TerraUSD stable currency. The SEC has accused the company and Kwon of misleading investors on several fronts, including providing false information on who was using TerraUSD for payment. The regulator has also labeled the earnings anchor agreement and LUNA token as “crypto asset securities”. The SEC has charged Terraform and Kwon with fraud, selling of unregistered securities, sale of unregistered securities swaps, and other related claims.

The SEC has alleged that Terraform and Kwon provided investors with false and misleading information concerning the use of TerraUSD for payment, and the issuer’s financial condition. According to the lawsuit, Terraform falsely claimed that its stablecoin was widely adopted as a means of payment and that it had sufficient collateral to support TerraUSD. The SEC claims that in reality, Terraform’s collateral was insufficient and its claims about adoption were inflated.

Additionally, the SEC has accused Terraform and Kwon of engaging in an offering and sales of unregistered securities swaps. The earnings anchor agreement and LUNA tokens were treated as securities and sold to the general public, per the lawsuit. The SEC claims that Terraform and Kwon did not register the securities with the SEC or file exemptions.

The lawsuit marks the latest effort by the SEC in cracking down on illegal activities in the crypto industry. The regulator has increased its scrutiny of the industry in recent years, and several notable cases have been filed in connection with cryptocurrency-related misconduct.

In summary, the SEC has filed a lawsuit against Terraform Labs and its co-founder Do Kwon for allegedly misleading investors on several fronts, including who was using TerraUSD for payment. The regulator has also accused Terraform and Kwon of fraud, selling of unregistered securities, selling of unregistered securities swaps, and other related claims. The three keywords to take away from this message are Terraform Labs, SEC lawsuit, and stable currency.