Jurors in the Southern District of New York found Terraform Labs (TFL) and its co-founder Do Kwon guilty of deceiving investors and securities fraud.
“We are pleased with today’s jury verdict holding TFL and Do Kwon responsible for widespread cryptocurrency fraud. [They] misled investors about the stability and security of crypto assets and the so-called algorithmic stablecoin TerraUSD,” said SEC Director of Enforcement SEC Gurbir Grewal.
According to him, the defendants caused significant harm to investors and destroyed tens of billions “virtually overnight.”
“We are extremely disappointed by the verdict, which we believe is not supported by the evidence. We continue to assert that the SEC lacks authority to bring this case, and we are carefully considering our options and next steps,” said a TFL representative to CoinDesk.
The trial lasted nine days and was held in absentia. The SEC charged TFL and Do Kwon with organizing a multi-billion dollar securities fraud in February 2023.
On March 23, 2023, Montenegrin police arrested Kwon and former TFL CFO Han Chan Chung while trying to fly out of Podgorica Airport to Dubai using fake passports. The latter was extradited to Korea in February 2024.
In his homeland, Kwon faces numerous charges, including violations of capital markets legislation. In the US, his case is being handled by the Federal Prosecutor’s Office in New York.
It was reported in March that the TFL co-founder will be released from prison upon completion of his sentence for attempting to cross the border with fake documents.
In April, the Montenegrin Supreme Court cancelled Do Kwon’s extradition, as the decision on permission and the order of extradition in this case is made by the head of the Ministry of Justice. The case will be reconsidered in the High Court of Podgorica.
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