Terra was a ‘house of cards’ – opening statements for civil trial SEC
Attorneys for the US Securities and Exchange Commission (SEC) portrayed Terraform Labs as a fraud empire “where investors lost everything” on the opening day of the civil trial.
According to a March 25 Reuters report, SEC attorney Devon Starren said in the U.S. District Court for the Southern District of New York that Terra was a “house of cards” that collapsed for investors in 2022. The civil trial began more than a year later. In February 2023, SEC officials filed a lawsuit against blockchain firm Terra and its co-founder Do Kwon for “orchestrating[ed] A multi-billion dollar crypto asset underwriting scam.
Kwon did not appear on the first day of the trial. The founder of Terraform Labs was arrested in Montenegro in March 2023 for using false travel documents and sentenced to four months in prison. Although he was reportedly released on March 23 pending extradition to the United States or his home country of South Korea, no decision had been made as of press time.
SEC Terra and Kwon misled investors about the stability of TerraUSD (UST), an algorithmically stable coin based on the US dollar. Impact on Terra (LUNA) and other tokens It contributed to a major crypto market crash in 2022, with many companies declaring bankruptcy.
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The trial was originally scheduled to begin in January. However, SEC officials have joined with Kwon's legal team to push the start date to March, expecting the Terraform Labs co-founder to attend the defense in person. In December 2023, Judge Jed Rakoff granted summary judgment to the SEC regarding unregistered securities on Terra and in favor of Kwon and the security-based swap offering and sales platform.
The Terraform trial is one of many cases in the crypto space expected to go to court in 2024. On March 28, former FTX CEO Sam Bankman-Fried pleaded guilty to seven felony charges. After pleading guilty to one felony count, former Binance CEO Changpeng Zhao is expected to be sentenced on April 30.
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