Do Kwon, founder of Terra Luna, found guilty of defrauding investors

In May 2022, its Terra Luna ecosystem caused investors to lose $40 billion following its collapse.

The verdict is in. Friday April 5, Do Kwon, the founder of Terra Luna and his Terraform Lab foundation, was found responsible for civil fraud by the American justice system, reports Bloomberg. This decision puts an end to a lawsuit filed by the American stock market watchdog, the SEC (Security and Exchange Commission), against Do Kwon and his empire in February 2023.

A US jury concluded that Do Kwon misled investors into believing in the reliability of his crypto company. As a reminder, in the spring of 2022, the luna cryptocurrency and the UST stablecoin of this ecosystem collapsed in a few days, causing investors to lose more than $40 billion.

“Despite all the promises of the crypto ecosystem, the lack of registration and compliance has real consequences for real people,” SEC member Gurbir Grewal said after the trial.

In December 2023, Jed Rakoff, an American judge, had already rendered a judgment according to which Do Kwon and Terra Labs sold unregistered securities in the United States, giving weight to the SEC’s accusations.

“Next steps”

This Saturday, Terraform Labs expressed its “disappointment” at the end of the trial.

“We continue to maintain that the SEC does not have the legal authority to bring this action at all, and we are carefully evaluating our options and next steps,” the company responded on X.

Currently detained in Montenegro, Do Kwon will eventually be extradited to South Korea after a battle between the country and the United States. The latter faces criminal charges in the United States and South Korea in connection with the collapse of its ecosystem.