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The Securities and Exchange Commission (SEC) has been targeting several digital currency companies and individuals over the past few weeks. In the past, the agency made a case against Do Kwon, the former CEO of Terraform Labs, and now, it looks like that case has gotten even bigger.
The SEC Continues Its Case Against Do Kwon
Terraform Labs was the company behind the failed LUNA token, an alleged algorithmic stable currency. The situation surrounding Luna got really hairy last summer when it crashed and burned, and its price fell to nothing overnight. Things like this aren’t supposed to happen with stable currencies, and from one day to the next, asset holders saw their wealth fall into a big, black void of emptiness. Billions were gone in mere minutes.
The SEC claims Kwon did not inform traders in the company of just how stable (or unstable) the token really was. For this, the agency has been after him for some time, and a warrant for his arrest was even issued a few months ago. Kwon, according to various news reports, has been on the lam ever since the arrest warrant was issued, though he recently claimed he’d been sitting in his living room coding, and that things have ultimately been blown out of proportion in the media. He also says that the attacks against him are “politically motivated.”
In any case, the SEC is continuing its case against Kwon and recently confirmed that tens of millions of dollars in bitcoin were reportedly moved out of the Terra/Luna project last May before the company fell into a dissolving heap.
This would suggest that what followed with the stable coin was a rug pull of sorts. Either that or Kwon and his fellow staff members knew the company was going to collapse and this was an attempt to protect themselves and their resources before that happened. In a statement, the SEC said:
This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants.
This Is a Running Theme, Lately
Putting the LUNA fiasco aside, the SEC is also targeting Kwon because his company reported to be involved in the establishment of a Korean mobile payment app called Chai. The agency alleges that Kwon and his fellow executives replicated payments on the Terraform blockchain as a means of making the system look like it was garnering more adoption than it really was.
The SEC has been going after several crypto-based companies and executives as of late. Not long ago, popular digital currency exchange Kraken was forced to part with $30 million and end all its staking activities as part of a settlement with the financial agency.