U.S. sues Luna cryptocurrency founder for ‘multibillion-dollar fraud’

U.S. sues Luna cryptocurrency founder for ‘multibillion-dollar fraud’

U.S. has decided to join international search for cryptocurrency founders Moon (Terra): the Securities and Exchange Commission (SEC) accused its CEO Do Kwon of multimillion-dollar fraud.

According to the agency, the company “misled investors” with the development of a stable currency called TerraUSDwhich was always supposed to be worth the same value as the US dollar..

Formal accusation

Terraform Labs and Do Kwon failed to provide “full, fair and truthful disclosure” of their cryptoasset values, said the chairman of the SECGary Gensler. The charges include registration and antifraud violations of the Securities Act and Exchange Act.

The firm, adds SECalso misled people by claiming that its token Moon would gain value from a Korean mobile payment app that used the Terra blockchain to settle transactions.

TerraUSD y Moon lost their parity with the U.S. dollar in May 2022, and the prices of both fell to near zero. Investors filed complaints accusing Terraform and Kwon of running a Ponzi scheme, and the freefall contributed to the collapse of cryptocurrency hedge fund Three Arrows Capital.

While Kwon insisted he was not evading capture, he left his native South Korea, refused to face investigators’ questions, and was placed on Interpol’s “red notice” list.

Cryptocurrency fraud

The charges of the SEC join a number of efforts to crack down on reported fraud among some of the biggest names in the crypto industry.

Authorities have most notably gone after FTX and its founder, Sam Bankman-Fried, over the downfall of that exchange, while former Celsius Network chief Alex Mashinsky is also accused of defrauding investors.

While the cryptocurrencies may still have a future, it is clear that government agencies want stricter enforcement of financial laws in this area.

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Kayleigh Williams