Attorneys in the trial between Terraform Labs and the United States Securities and Exchange Commission (SEC) have claimed that the crypto firm made false statements to investors about its platform. According to a Reuters report on April 5, SEC lawyers argued in a New York District Court that Terraform’s narrative was based on falsehoods, including the stability of algorithmic stablecoin TerraUSD (UST) and an integration with a South Korean payment app. Terraform’s attorney, Louis Pellegrino, countered that co-founder Do Kwon had been honest in his public statements and that the SEC’s case relied on distorted information. The civil trial began more than a year after the SEC filed a lawsuit against Terraform in February 2023, accusing the platform and Kwon of orchestrating a multi-billion dollar crypto asset securities fraud. SEC lawyers likened Terra to a “house of cards” that collapsed in 2022, causing significant losses for investors and contributing to a wider crypto market downturn that led to bankruptcies for FTX, BlockFi, Celsius, and others. The trial has proceeded in Kwon’s absence as he remains in Montenegro, where courts are deciding on extradition requests from the US and South Korea. Kwon was arrested in March 2023 for using forged travel documents. In January, Judge Jed Rakoff postponed the start date of the SEC v. Terraform Labs trial to March 25 to accommodate Kwon. Other prominent figures in the crypto industry facing legal proceedings in the US include former Celsius CEO Alex Mashinsky, who is undergoing a criminal trial in January 2025, and former Binance CEO Changpeng Zhao, who has a sentencing hearing scheduled for April 30. The proposed crypto regulations in the US are driven by lawmakers’ fears and doubts, according to a magazine article.
SEC Claims Terraform Labs Was Founded on Deceptive Principles During Trial