According to Cointelegraph: The SEC has commenced its civil trial against Terraform Labs, portraying the company as a 'house of cards' that led to investors losing significantly. The trial kick-started on March 25, following a lawsuit filed by the SEC in February 2023 against Terra and its co-founder, Do Kwon, for allegedly orchestrating a multi-billion dollar crypto asset securities fraud. Do Kwon did not appear in the courtroom on trial day one.
Source: Reuters
The SEC's allegation revolves around the supposed misleading of investors about the stability of TerraUSD (UST), an algorithmic stablecoin. Following its depegging from the U.S. dollar, Terra and other tokens faced a major dip, contributing to a significant market downturn in 2022 that resulted in multiple company bankruptcies.
Originally slated to begin in January, the trial was delayed to March, awaiting Do Kwon's defense in person. Judge Jed Rakoff previously ruled in favor of the SEC over Terra's handling of unregistered securities and in favor of Kwon and his platform for offering and selling security-based swaps in December 2023.
The Terraform trial marks one of many anticipated legal confrontations in the crypto sphere in 2024. Sam Bankman-Fried, FTX's former CEO, is set to be sentenced following his conviction on seven felony charges on March 28.
