The trial procedures on civil fraud against Terraform Labs and its founder Do Kwon are coming to an end as attorneys are gearing up to deliver their closing arguments.
The trial initiated and proceeded by the U.S. Securities and Exchange Commission focuses on accusations of wire fraud and scamming investors with TerraUSD, a stablecoin of Terraform’s blockchain technology.
Allegations by the SEC
The SEC has alleged that the 2021 instability of TerraUSD, a coin specifically designed to maintain a $1 value, was a deliberate move made by Terraform and Do Kwon to mislead investors and perform wire fraud.
Additionally, the SEC has also accused them of falsely claiming that Terraform’s blockchain was integrated into a popular Korean mobile payment app.
The SEC’s case alleges that Terraform and Kwon engaged in deceptive practices, including orchestrating the purchase of TerraUSD to artificially inflate its price when it deviated from its peg to the dollar. Moreover, they are accused of falsely promoting Terraform’s blockchain as the backbone of transaction processing for the Chai payment app.
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The Defence Pleads Innocent
Defending themselves from the allegations, Terraform and Kwon’s defence team has contended throughout the trial that the SEC’s allegations are not based on strong grounds but on misinterpretations and unreliable witnesses seeking whistleblower payouts.
The defence denied allegations of intentionally deceiving their customers and emphasized the importance of context.
Kwon, who was arrested in Montenegro in 2023 over a fake passport, has been absent from the trial as he is currently under house detention, with restrictions on travel. Although both the U.S. and South Korea have sought his extradition on criminal charges related to the case, the Montenegrian Government has yet not given a final decision on which country to grant the extradition treaty.
The collapse of TerraUSD and Luna, another token closely linked to TerraUSD, resulted in significant losses for investors, estimated by the SEC to be over $40 billion. This collapse had broader implications, affecting the value of other cryptocurrencies and leading to bankruptcy filings by several companies in 2022.
Also Read : Binance Burns Over 4 Billion Terra Luna Classic Tokens
All in all …
As the trial wraps up, both parties will make their final arguments before the jury. It is likely that the Court might proceed with the case in the absence of Do Kwon unless the defence party conjointly pleads not to pass an ex-parte decree.
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