- The Securities and Exchange Commission stated that Terraform and Do Kwon misled and deceived customers in the name of marketing LUNA.
- SEC Division of Enforcement Director Grewal was noted calling Terra ecosystem neither decentralized nor finance but a simple fraud.
- LUNA price dropped by more than 8% to trade at $1.81 following the news of SEC’s charges.
Terraform Labs, and its CEO, Do Kwon, were the highlights of Q2 and Q3 in 2022. The decentralized finance ecosystem collapsing led to the crypto market experiencing its first contagion before the events of FTX. The Securities and Exchange Commission (SEC) is finally taking action against the perpetrators.
SEC sues Terra and Do Kwon
In a press release on Thursday, SEC announced that it had charged Terraform Labs and its Chief Executive Officer (CEO), Do Kwon, with orchestrating a multi-billion dollar crypto fraud. As per the complaint, Terra and Kwon had been marketing crypto asset securities to its investors to earn a profit.
This led to the Commission claiming that along with marketing LUNA, Terraform and Kwon also misled and deceived investors. The SEC further charged the accused with misleading investors about the stability of its stablecoin UST, the de-pegging of which caused the market to crash as the rest of the tokens in the Terra ecosystem lost their value.
SEC Chair Gary Gensler, at the time of the press release, was noted saying,
“We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors… This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.”
Filed in New York, the SEC charged Terra and Do Kwon with violating the registration and being anti-valued. In tune with this sentiment, Director of the SEC’s Division of Enforcement, Gurbir S. Grewal, said,
“As alleged in our complaint, the Terraform ecosystem was neither decentralized, nor finance. It was simply a fraud propped up by a so-called algorithmic “stablecoin” – the price of which was controlled by the defendants, not any code.”
LUNA price dips again
LUNA price at the time of writing dropped by more than 8.2% to bring the trading price of the altcoin to $1.81. The cryptocurrency is nearing the immediate support at $1.67. Losing it would result in the altcoin flipping from support into resistance, and a decline to $1.48 is on the cards.
LUNA/USD 1-day chart
If LUNA price manages to bounce off the immediate support, it would be able to minimize the impact of the charges by climbing back to today’s highs and eventually testing the resistance line at $2.05.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
Ethereum price to outpace Bitcoin price as ETH jumps over key hurdle where BTC fumbles
Ethereum (ETH) price is working on its recovery after it dipped to a two-week low on Thursday. While Bitcoin price has failed to make a similar move and head back above $26,500, Ethereum is outpacing Bitcoin and has been able to push above $1,800.
Bitcoin price retreats as US core PCE inflation comes hotter than expected
Bitcoin price declined in response to April's US core PCE inflation data, which came higher than anticipated. The knee-jerk reaction from market participants increased the selling pressure on the asset, pushing it below $26,400.
Cardano founder says CIP-1694 upgrade will be a “wake-up call” for crypto
Cardano, one of Ethereum’s main competitors, is gearing up for further decentralization through its Improvement Proposal (CIP-1694), which is expected to bring the Ethereum-killer altcoin into a new era of governance with decentralization in its decision-making.
PEPE price action puts traders on the edge of their seats as pennant gets filled
PEPE price is entering the very last possible stage before finally determining whether bulls or bears have the winning hand in this poker game showdown.
Bitcoin: BTC delays inevitable crash to $25,000
Bitcoin price is delaying a crash that has been brewing for roughly two weeks. A failure to push higher could result in a steep correction next week. The troubling macroeconomic conditions could be key in catalyzing and trigger a nosedive for BTC holders.