A New York jury found Terraform Labs and its co-founder Dodo Kwon guilty of deceiving investors about the stability of UST.
The collapse of Terra’s stablecoin UST in 2022 cost investors $40 billion and sent shock waves through the cryptocurrency sector. The ruling follows a two-week trial and marks a significant victory for the SEC in its efforts to increase oversight of the digital currency space.
The ruling may also have implications for the outcome of future criminal trials against Kwon in the United States and South Korea, where conviction standards are stricter.
Mr. Kwon, who controls 92% of Terraform, has been detained in Montenegro on suspicion of using a fake passport and faces extradition to the United States or South Korea. Both countries are charging him with fraud.
The chances of Kwon’s extradition have increased after Montenegro’s Supreme Court recently ruled challenging an earlier decision in favor of his extradition to Seoul.
After deliberating for more than two hours, the jury concluded that Kwon and his company falsely claimed that Chai, a widely used payment app in South Korea, used Terraform’s blockchain technology.
The ruling also pointed out misleading information about the stability of the UST stablecoin to maintain a consistent value that is algorithmically pegged to the U.S. dollar.