Judge Rules in Favor of the SEC Regarding Do Kwon and Declares UST and LUNA Securities

Published on:

Last Updated on December 29, 2023 by Bitfinsider

In a significant victory for the Securities and Exchange Commission (SEC), a federal judge ruled on Thursday that Terraform Labs and its founder, Do Kwon, offered and sold unregistered securities in the form of cryptocurrencies, including LUNA and UST.

The SEC was granted summary judgment by Judge Jed Rakoff of the U.S. District Court for the Southern District of New York regarding allegations that Terraform provided unregistered securities and security-based swaps. This means that the SEC’s case against the company and its founder will not involve deliberations on those specific issues during the trial.

In the event that the case does not reach a pre-settlement agreement, the jury will be limited to evaluating the remaining components of the securities fraud charges. These include determining whether Kwon caused misrepresentation or deceit to customers regarding the security of Terraform’s financial products, including the algorithmic stablecoin UST.

UST, an algorithmic stablecoin designed to maintain parity with the U.S. dollar despite lacking currency reserves, experienced a collapse in May of last year. This event resulted in the loss of approximately $60 billion in value and instigated a crypto winter that has yet to abate.

In addition to attempting to classify Terraform’s distribution of numerous cryptocurrencies as unauthorized unregistered securities offerings, the SEC has further claimed that Kwon participated in a scheme to mislead investors regarding the characteristics and reliability of UST’s $1.00 basis.

Late in October, Kwon’s legal representatives made an effort to have the case dismissed on the grounds that the SEC had not provided sufficient evidence to establish that Terraform had offered securities or been involved in improper activities. Manifestly unconvinced on at least one of those arguments, the judge remained. If the trial proceeds according to plan, jury selection will commence in lower Manhattan on January 29.

The SEC case is merely one of numerous legal complications that Kwon is presently facing. The cryptocurrency founder was accused by the Department of Justice with eight counts of criminal fraud in March. Kwon was apprehended in Montenegro on the same day he evaded allegations in his country of origin, South Korea.

Prosecutors from the United States, South Korea, and Montenegro are now all curious about him. The ongoing assessment of the U.S. government’s request to extradite Kwon was halted earlier this month by a judge in Montenegro.

Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked. To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor
Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.