This decision represents a major win for the United States Securities and Exchange Commission (SEC) in its ongoing battle against Terraform Labs and Do Kwon.

The verdict has sent shockwaves through the cryptocurrency community, raising concerns about the future of digital assets and the SEC’s growing influence in the industry.

Read Also: Terra Founder Do Kwon Allegedly Moved $29 Million Worth of Crypto Out of LFG Wallet After Arrest

Unveiling the Security Skeletons in Terra’s Closet

The SEC’s case against Terraform Labs and Do Kwon alleges a deliberate deception. According to the commission, Terra marketed LUNA and UST, among other crypto assets, as unregistered securities.

The court found weight in a statement made by Do Kwon, where he expressed confidence in Terra’s efforts, which the court interpreted as a promise of profit. This statement played a crucial role in solidifying the court’s view that investors in LUNA and UST were participating in a shared enterprise rather than simply speculating on digital tokens.

A Partial Victory, But the Jury Is Still Out

While the SEC celebrates this victory, the legal battle is not over. Judge Rakoff dismissed charges related to security-based swaps and fraud, deeming them complex and requiring further examination. These charges will be decided by a jury in an upcoming trial.

The outcome of these remaining charges adds an element of suspense to the case. If proven, the fraud charges could have severe consequences for Terra, potentially resulting in substantial penalties.

On the other hand, a jury ruling in Terra’s favor on the fraud claims could cast doubt on the entire securities argument, challenging the SEC’s regulatory ambitions in the crypto space.

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Read Also: Do Kwon Accuses FTX Founder of Manipulating Terra (LUNA) and UST Prices, Others Share Evidence

Echoes of Ripple and the SEC Power Play

The Terra case bears similarities to the ongoing legal dispute between the SEC and Ripple, where the classification of XRP as a security is fiercely contested.

Although Judge Rakoff denied Terra’s attempt to use the Ripple ruling as a defense, the parallels between the cases are evident. This ruling, combined with the SEC’s recent classification of ADA and SOL as securities, indicates an increasingly assertive regulatory landscape for digital assets.

The verdict in the Terra case serves as a chilling precedent for the cryptocurrency industry, highlighting the regulatory uncertainty that looms over the sector. With the SEC wielding the “securities” label as a powerful tool, both innovators and investors are left grappling with the question of what lies ahead.

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A fresh report showed that the Gary Gensler-led SEC filed a lawsuit against Do Kwon and TFL on Thursday over the failure of UST — now represented as USTC — in May 2022. This adds to the list of different individual and class action lawsuits slammed against the on-the-run CEO, Do Kwon. 

Particularly, the securities watchdog charges the above-mentioned defendants because they disobeyed the registration and anti-fraud provisions of the Securities Act and the Exchange Act. The SEC filed the crypto lawsuit in the U.S. District Court for the Southern District of New York

The SEC contends that the Singapore-based blockchain company and its CEO orchestrated a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin (UST) and other crypto asset securities. 

SEC Chair Gary Gensler said, “We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD,” said SEC Chair Gary Gensler. “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

Per the update, the financial regulator which recently fined Kraken $30 million for offering an unregistered security staking program added that “Terraform and Kwon raised billions of dollars from investors by offering and selling an inter-connected suite of crypto asset securities, many in unregistered transactions.” 

Notably, this lawsuit comes nine months after TerraClassicUSD (USTC), formerly known as TerraUSD (UST) depegged and lost parity with a dollar due to an error in project management and many other unclear factors. 

The dramatic collapse of this supposed stablecoin led to the massive plunging of its sister token LUNA (now called LUNC). Roughly $40 billion was lost in the immediate Terra ecosystem whereas the incident wiped out about 60 billion dollars from the broader crypto market.

The present woes of Celsius Network, Voyager Digital, and Three Arrows Capital (3AC) were caused by the depegging of UST. Hopefully, the SEC is able to get justice for the many victims of the Terra ecosystem meltdown.

LUNC is yet to recover from the historic crash it recorded. But the project which is now community-led is slowly revitalizing as many notable developments surround it including the Terra Classic token burning initiative to reduce the asset’s total supply to 10 billion and staking to increase token scarcity.

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Spurred by the latest development, Terra founder Do Kwon has called out the beleaguered crypto entrepreneur SBF to make public the handling of the billions of dollars worth of BTC borrowed from Voyager by Alameda Research. 

Kwon further accused FTX’s Sam Bankman-Fried of shorting BTC to handicap the Luna Foundation Guard’s reserves, citing that Alameda has a record of borrowing lump sums in BTC on the de-peg dates of the algorithm-based stablecoin, formerly called UST.  

“Alameda borrowed 9 figures in bitcoin from Voyager (public bankruptcy filings) on depeg dates and asked other large firms to borrow more (10 figs) – what this was used for needs to become public knowledge. Short BTC to handicap LFG reserves?” he tweeted. 

As stated by the Terra founder, the fall of the former TerraUSD (UST) began in February 2021 when SBF’s hedge fund Alameda Research, sold 500 million UST in a few minutes to drain its Curve pools. 

This is fairly public knowledge at this point, but the large currency contraction that UST went through in Feb 2021 was started by Alameda, when they sold 500mm UST in minutes to drain its curve pools during the MIM crisis

— Do Kwon (@stablekwon) December 8, 2022

Likewise, the TFL founder has requested Genesis Trading, a lending firm, to make clarifications regarding the $1 billion worth of UST bought by them before the May Terra collapse took place.

“I think the time has come for Genesis Trading to reveal if they provided the $1B UST shortly before the crash to SBF or Alameda – the purchase from LFG was represented as stemming from “interest to participate in the Terra Defi ecosystem” – not to provide ammo for a peg attack,” he wrote on Thursday. 

Read Also: CZ Binance Brands FTX’s Bankman-Fried “One of the Greatest Fraudsters in History”

Sam Bank-man Fried Blamed For Do Kwon’s UST Failure

While Genesis Trading is yet to issue an official statement and federal prosecutors are still in the process of ascertaining SBF’s involvement in the collapse of the algorithmic stablecoin, initially labeled TerraUSD, a recent update showed that the FTX founder’s hedge fund Alameda Research, perhaps, orchestrated the fall of UST. 

In response to Do Kwon’s claims, José Maria Macedo, the builder of Dephil Labs, took to Twitter on Thursday to make some revelations. 

According to him, “Genesis, a lending firm, “bought” $1B of UST from LFG in April. This UST was sold into the Curve pool during the early morning hours on Sunday (May 8th), initiating the depeg.”  “The answer to who attacked UST will be found in the Genesis lending book,” he added. 

Read Also: Ethereum’s Vitalik Buterin: FTX Exchange Meltdown “Cuts Deeper” Than Terra (LUNA) Collapse

José Macedo who listed several disclosures that pointed to Sam Bankman-Fried as the cause of Terra collapse noted that SBF was famously bearish of UST, confirming that FTX did set off the February 2021 de-peg incident of UST. 

Evidence for Alameda being the attacker:

-Known to be borrowing BTC in size at the time (Voyager filings)
-FTX listed UST perps shortly before this
-Set off the previous UST depeg event in Feb 2021
-Sam was famously bearish UST. Alameda known for being aggressively PvP

— José Maria Macedo (@ZeMariaMacedo) December 8, 2022

“Ultimately, it doesn’t matter if UST was attacked. The winning decentralized money must be robust and able to withstand highly adversarial conditions. UST was not. However, it would be poetic justice if Alameda set off the events that ultimately led to their own demise,” he concluded.

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Do Kwon, the co-founder and CEO of TerraForm Labs, took to Twitter on Friday to announce his intention to arrange a mild meetup conference in the coming days. He noted that cops around the world are welcome to attend the probable gathering.

According to him, the goal is to clear the air in relation to rumors that he went into hiding following the collapse of the TerraClassicUSD(USTC) and Terra Classic (LUNC) in May. But it’s worth noting that Kwon has been mildly demonstrating support for the now community-driven Terra Classic (LUNC) project to aid its revitalization.

In the thread of tweets, he added that the intended event would also discredit the claims that he is on the run and trying hard to evade arrest warrants from South Korean authorities, Interpol, and other crime-related departments.

Related: Do Kwon Answered Questions on Everyone’s Mind in the Latest Interview: Details

He wrote, “Alright, I’ll throw a meetup/ conference soon to get over this in-hiding bs.” Cops from all over the world are welcome to attend, he included. 

“For those of you that have been spreading falsehood on the taxpayer’s dime, you are invited with VIP honors – will even pay for your plane ticket. Show up if you dare,” Kwon thundered. 

Alright ill throw a meetup/conference soon to get over this in hiding bs

Cops from world over welcome to attend

— Do Kwon (@stablekwon) November 3, 2022

The Terra founder went further to reiterate that the Terra collapse investigation launched by Korean authorities is highly politicized.

*makes up complete bullshit for political reasons*

Not true?

*Claims sovereign immunity*

— Do Kwon (@stablekwon) November 3, 2022

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The post Terra Founder Do Kwon Plans to Host a Conference, Says Cops Worldwide Could Attend appeared first on Times Tabloid.

The recent lawsuit filed against Kwon was reported by a legal news platform Law360. The suit also involves two Terraform Labs executives. They are being charged with violating the Racketeer Influenced and Corrupt Organizations Act, inflating the price of UST and publicizing false information to mislead the public over the allegation of money laundering, worth $80 million, leveled against them.

Read Also: Proposal for the Massive Burn of Terra Classic (LUNC) To Boost Price Receives 83% Support: Details

The report reads in part:

“Defendants touted the stability of the coins and guaranteed 20% annual returns on coins deposited in Terraform Labs’ high-yield savings application on the Terra blockchain — the Anchor Protocol.”

According to the report, the lawsuit was filed by Matthew Albright in New York federal court, on behalf of all the victims of the TerraUSD (UST) collapse. It’s also revealed in the report that Plaintiff bought the stablecoin UST between May 1st, 2019, and June 15th, 2022. Aside from the defendants mentioned above, the suit also named some ventures as defendants.

The plaintiff alleged in the filing that some defendants initiated various money laundering activities to move assets worth millions of dollars into their respective wallets. He further alleged that UST was designed to serve as a Ponzi scheme.

Read Also: “You Didn’t Buy TerraUSD (UST) From Me,” Do Kwon Hits Back

Law360 added:

“As long as demand for UST remained high, Terra’s UST/Luna exchange mechanism will keep the supply of Luna relatively low and sustain a Luna price that could support UST’s peg…

“But as soon as the demand for UST fell and users began redeeming UST for Luna in large quantities, Luna could enter a vicious cycle of hyperinflation that would collapse its own price and UST with it.”

Meanwhile, a Terraform Labs spokesperson, who reached out to TimesTabloid via an e-mail, wrote, “Terraform Labs will not comment on pending litigation other than to say it believes the claims are meritless and it intends to defend against them fully.”

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The post Terra (LUNA) Founder Do Kwon Slammed With Fresh Class Action Lawsuit over TerraUSD (UST) Crash appeared first on Times Tabloid.

May 2022 was a month that can never be forgotten in the history of the crypto industry. A month that recorded the largest ever crypto collapse.

TerraUSD (UST), the algorithmic stablecoin of Terra blockchain, lost its peg. At the same time, Terra (LUNA), which is now renamed Terra Classic (LUNC), dropped from around $100 to fractions of a Cent within a few days.

Read Also: Mike Novogratz Breaks Silence on Terra Collapse, Speaks on Galaxy Digital’s Investment in LUNA

$12 Million Reimbursement for LUNA Victims

According to InsurAce in a blog post, $12 million will be spent to compensate 155 investors that were grossly affected by the Terra collapse.

InsurAce was specifically launched in April 2021 to provide risk protection services to the decentralized finance (DeFi) industry. It’s meant to insure users’ investments against sudden collapse or bankruptcy such as that of Terra ecosystem.

Due to the increasing insurance claims, InsurAce has to spend about $11.7 million to compensate investors. It’s worth noting that the firm only received relatively $94,000 in insurance premiums from UST investors.

The DeFi insurance firm has a token codenamed INSUR and specially created for investors and stakers to vote on various issues. It was a voting process that found 155 claims eligible, while 18 claims were found ineligible.

Read Also: Hacktivist group Anonymous Vows to Expose Do Kwon over Terra (LUNA) Collapse: Details

Reacting to the development, Dan Thomson, the CMO of InsurAce, said:

“The decentralized voting was conducted by InsurAce’s community of Claims Assessors who hold and stake INSUR Tokens. And at the conclusion of the Voting process, they approved a total of 155 UST de-peg Cover claims and 18 rejected as not ineligible in line with the Stablecoin de-peg Cover terms and conditions.”

Also, the CMO disclosed that the firm has a plan to compensate investors and stakers since the money used for compensations belongs to them.

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The post 155 Victims of Terra (LUNA) Collapse to Get about $12 Million Compensation: Details appeared first on Times Tabloid.

In the first interview since the historic collapse of the Terra ecosystem, Kwon, who named his only child Luna, revealed that a leak within the Terraform Labs contributed to the major crash.

Kwon said the timing of the planned withdrawal of UST liquidity from the stablecoin’s main Curve pool was supposed to be known by only TFL employees. The drop in liquidity later made it easy for the attacker to make UST lose its $1 peg.

In the course of the interview, he told Coinage that there were probably some information flows they were not aware of to this day.

Read Also: Do Kwon on Terra (LUNA) Collapse: There Have Been No Charges From Korean Authorities

Plans to Airdrop Additional Funds

Speaking on his future with Terra 2.0, Kwon said his intention is to keep building on the new blockchain. However, he believes that he will no longer be at the center of everything, unlike the previous blockchain that collapsed.

Do Kwon noted:

“I think the core of that community still lives on and I think they are primed to launch interesting things on top of Terra 2.0 independent of the things that we do…

“I’m always going to be doing things on Terra and for the Terra community, this is my home and this is where I feel like there’s the brightest future and most of Terraform Labs is still in.”

Although some executives and the legal team abandoned the firm in the middle of the crash, only two developers jumped the ship, Kwon stated.

Read Also: Mike Novogratz Breaks Silence on Terra Collapse, Speaks on Galaxy Digital’s Investment in LUNA

The Terraform Labs founder is also considering options to airdrop additional funds to victims of the UST collapse, using the Luna Foundation Guard (LFG) reserves of 311 BTC worth around $6.7 million and a lump of Avalanche (AVAX) tokens that were not spent during the fiasco.

Do Kwon said as soon as the UST holders are properly accounted for, the plan is to liquidate the LFG’s holdings and start the process of making the airdrops get to smallholders.

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In the yet to be fully released interview by Coinage Media, hosted by Zack Guzman, titled “inside Crypto’s Largest Collapse”, Do Kwon made his first face-to-face interview since the Terra historic collapse of May 2022.

The brief video was released to prepare the people who have been waiting to see Do Kwon speak exclusively about the Terra collapse.

Read Also: Terra (LUNA) Founder Do Kwon Issued “Notice upon Arrival” By Korean Ministry of Justice: Details

In the clip that lasted for just 1 minute and 30 seconds, Terraform founder referred to crypto as a wild card, stating that a lot of pressure was mounted on TerraUSD (UST) as an algorithmic stablecoin.

In the course of the interview, Do Kwon said Terra was not designed to defraud or scam people. He said UST was made to be a stablecoin but failed to remain stable

Do Kwon noted, “…It was supposed to be a stablecoin, but didn’t remain stable. It was started to become industry’s standard, I bet big, but I think I lost…”

EXCLUSIVE: I sat down with Terra Founder @stablekwon for his first interview since the project’s $45 billion collapse

Our 2-day conversation premieres only on the community-owned NFTV series @coinage_media. Episode 0 coming Mondaypic.twitter.com/9svfn9wBDn

— Zack Guzmán (@zGuz) August 14, 2022

The implosion of the Terra (LUNA) ecosystem in May was an event that will remain in the memory of crypto enthusiasts. The ecosystem crashed with the life savings of many people, which led to a number of reported suicides.

The total amount lost in the implosion was relatively $45 billion. The devastating event shook the entire crypto market and other assets, including Bitcoin (BTC) and Ethereum (ETH), are still struggling to recover from the negative impact.

Read Also: Do Kwon Debunks Claims That Terraform Labs Has Special Privilege on Terra Classic (LUNC) Governance

Since the incident happened, Korean prosecutors and other international bodies, have been scrutinizing Terraform Labs founders, including their present and past employees.

It can also be recalled that Kwon confidently told The World Street Journal back in June that he didn’t run a fraudulent project contrary to what many people insinuated.

Do Kwon said, “I made confident bets and made confident statements on behalf of UST because I believed in its resilience and its value proposition. I’ve since lost these bets, but my actions 100% match my words. There is a difference between failing and running a fraud.”

He also said, “I have great confidence in our ability to build back even stronger than we once were. Many builders are in the process of relaunching their apps on the new chain.”

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The post Do Kwon Breaks His Silence, Says He Lost His Big Bet on Terra (LUNA) and UST appeared first on Times Tabloid.

Dan Sung-han also requested a departure ban for Timon Board Chairman Shin Hyun-Seong, who also co-founded Terraform Labs. Current and former executives of the firm are also not left out of the investigation. According to the report, the request has been approved by the Ministry of Justice.

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The South Korean prosecutors, which are investigating the collapse of TerraUSD (UST) and Terra (LUNA), have reportedly launched a forced investigation into the issuer of the tokens, Do-Hyung Kwon.

Do Kwon’s Accusations

Going by the report, Terraform Labs CEO Do Kwon is accused of issuing cryptocurrencies without letting investors know that the prices of the digital currencies, UST and LUNA, could crash.

Kwon and others involved in the development of UST and LUNA are also accused of violating the pseudo-receipt law of ‘blocking’ the investment by telling investors to buy LUNA tokens and stake them for the interest of about 20%.

Read Also: Hacktivist group Anonymous Vows to Expose Do Kwon over Terra (LUNA) Collapse: Details

Although the Co-founder Shin Hyun-Seong was also accused of the same, his position was not related to the current situation because he ended the partnership with Kwon in March 2022, the report stated.

On the 20th of July, prosecutors seized and searched 15 places, including Shin’s home and seven local crypto exchanges. At the moment, prosecutors are analyzing the transaction details of UST and LUNA via a search and seizure in the domestic exchange.

According to the report, early investors and affiliates of Terraform Labs (TFL) were also included in the search and seizure targets. Once the analysis of the confiscated material is complete, officials will commence the investigation.

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After the launch of the Terra 2.0 blockchain, the digital token LUNA 2.0 opened as high as $30 on Bybit exchange. However, the digital asset soon dropped massively by 88% to $3.5 and resurged to settle around $6, but it later lost its footing to record its all-time low of $1.62.

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The good news is that the token has started showcasing signs of recovery. It’s worth noting that LUNA 2.0 has gained 70% since dropping to its all-time price low. Despite the positive trend, the cryptocurrency is still trading far from the launch price of $30

At the time of press, LUNA 2.0 is trading at $2.40, with a relatively 9% price upsurge in the last 24 hours, per data provided by CoinMarketCap.

Has LUNA 2.0 Major Recovery Started?

Expectedly, the massive fall of the digital token prompted many investors to start selling as faith in the crypto project disappears.

Howbeit, the market has started to re-establish itself since the recovery started moving during the past week. As a result, the liquidations have begun to level down, resulting in a dramatic increase in the price of Terra (LUNA 2.0).

Read Also: Terra (LUNA) Founder Do Kwon to Investors: Only Hold Beliefs that Will Stay Constant at 5 Digits or 1

TerraUSD (UST) and Terra Classic (LUNC) Also Spiked

Over the last seven days, TerraUSD (UST) has gained over 400% despite the heightened volatility associated with Terra (LUNA 2.0). According to CoinMarketCap, it is trading for an average price of about $0.02014. The 24-hour trading volume for UST is at $83 million.

Likewise, the prices of Terra Classic (LUNC) have also increased significantly over the past 24 hours. As a result, the market value of LUNC has surged by $208 million. At the time of writing, LUNC is trading at $0.0001065, with about an 18% price upsurge in the last 24 hours, according to CoinMarketCap.

Meanwhile, the co-founder and CEO of Terraform Labs, Do Kwon, continues to face scrutiny from the public and authorities for allegedly having a hand in the collapse of the Terra ecosystem.

Hacktivist group, Anonymous, has also vowed to make sure Kwon is brought to justice as soon as possible.

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The post LUNA 2.0 Gains 70% from All-Time Low in Nine Days, UST Up 400%, LUNC Gains $208M. Can This Trend Be Maintained? appeared first on Times Tabloid.