As revealed by Bloomberg, the regulatory agency accused Kwon of mislead terra investorsamong other things, doing false statements about a relationship with a popular South Korean mobile payment app called Chai and about the stability of the ‘stablecoin’. It should be remembered that TerraUSD was not backed by real assets, but by an algorithm and a complex system that ended up failing and losing its link to the dollar, causing the token to disappear.
The SEC’s complaint also highlights that last year’s crash was not the first time the stablecoin lost its anchor with the green ticket. A year earlier, in May 2021, the value of the ‘token’ fell below one dollar, which led Terraform Labs and Kwon to ask a third party of American origin to step in and buy large quantities to inflate their value, according to the agency. The regulator denounces that this fact, which was promoted as a “triumph of decentralization”, caused the entry of important flows of money in the ‘token’.
“Almost immediately after the recovery of UST in May 2021, Terraform and Kwon began making materially misleading statements about how UST’s peg to the dollar was reinstated. Specifically, Terraform and Kwon emphasized the alleged effectiveness of USTC’s underlying algorithm in keeping UST pegged to the dollar, misleadingly omitting the true cause of USTEC’s re-pegging: the deliberate intervention of the US Trading Firm to restore the peg. the sec.
According to Gurbir S. Grewaldirector of regulatory compliance for the US regulator, Terra’s project was neither “decentralized nor financial”, but a “fraud propped up by a so-called algorithmic stablecoin whose price was controlled by the defendants, not by any code”.
earth’s collapse
In May of last year, the crash of the stablecoin triggered a domino effect that ended with the bankruptcy of several cryptocurrency companies such as hedge fund Three Arrows Capital and lender Celsius Digital.
The hard blow suffered dragged cryptocurrencies into a bear market from which they have not yet emerged and which was accentuated by the bankruptcy of FTX.
On the other hand, this action only confirms that the SEC established greater regulatory control over cryptocurrencies.
Do Know, is wanted by South Korea and Interpol as his whereabouts are unknown. South Korean authorities issued an arrest warrant for alleged violations of capital markets laws.
Source: Ambito
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