By Jody Godoy
(Reuters) – Attorneys for Terraform Labs and its founder Do Kwon are anticipated to present closing arguments on Friday at a trial on claims that Terraform and Kwon defrauded buyers earlier than the collapse of their stablecoin shocked cryptocurrency markets in 2022.
The U.S. Securities and Alternate Fee accuses the Singapore-based firm and Kwon of deceptive buyers in 2021 concerning the stability of TerraUSD, a stablecoin designed to keep up a price of $1. The regulator additionally accused them of falsely claiming Terraform’s blockchain was utilized in a preferred Korean cell cost app.
Attorneys for Terraform and Kwon have beforehand argued to the jury that the SEC took statements out of context and relied on witnesses who purpose to get whistleblower payouts if the SEC succeeds.
The regulator is searching for civil monetary penalties and orders barring Kwon and Terraform from the securities trade.
Kwon, who was arrested in Montenegro in March 2023, didn’t attend the trial, which started March 25. Each the U.S. and South Korea, the place Kwon is a citizen, have sought his extradition on felony prices.
Kwon designed TerraUSD and Luna, a extra conventional token that fluctuated in worth however was intently linked to TerraUSD.
The SEC estimates that buyers misplaced greater than $40 billion on the 2 tokens mixed when the TerraUSD peg to the greenback couldn’t be maintained in Could 2022.
Their collapse additionally dragged down the worth of different cryptocurrencies, together with bitcoin, and precipitated wider havoc within the crypto market, main a number of firms to file for chapter in 2022.
The SEC has stated Kwon and Terraform secretly organized to have a 3rd get together buy massive quantities of TerraUSD to prop up the value when the stablecoin slipped from its peg a 12 months earlier, in Could 2021. Kwon falsely attributed the restoration to the reliability of TerraUSD’s algorithms, based on the regulator.
The SEC additionally has stated Kwon and Terraform falsely touted Terraform’s blockchain as getting used to course of and settle transactions between clients and retailers on the Chai cost app.