SEC Slaps Terra Labs With a Lawsuit Over Misleading Investors

SEC Slaps Terra Labs With a Lawsuit Over Misleading Investors

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Venture Capitalists

Terra Labs and its CEO Do Kwon have been hit with a lawsuit by the US Securities and Exchange Commission for allegedly misleading investors, a new filing reveals.

According to the February 16 suit, Terra Labs and its CEO Kwon raised billions of dollars from investors through the sale and offer of an interconnected suite of crypto assets (Terra USD) securities, many of which are unregistered transactions from April 2018 till May 2021 when Terra’s ecosystem collapsed. These transactions also include “mAssets,” security-based swaps designed to pay returns by mirroring the price of stocks of US companies.

“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,” said SEC Chair Gary Gensler. “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

Do Kwon who has been on the run has been issued a red notice by Interpol, though he claimed not to be on the run, he’s reportedly living as an illegal immigrant in a country in Europe. 

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