Do Kwon’s fallout: Terraform Labs to shut down after $4.47B penalty
The post Do Kwon’s fallout: Terraform Labs to shut down after $4.47B penalty appeared on BitcoinEthereumNews.com.
Terraform Labs’ closure and $4.47 billion SEC settlement reveal the consequences of crypto fraud. Cases involving Kwon, Zhao, and Bankman-Fried emphasize need for increased scrutiny in crypto. Amidst various cryptocurrency projects making headlines for their successful launches, the fallout of some failed crypto companies has also captured significant attention. The fall of Terraform labs Terraform Labs, led by now CEO Chris Amani, has announced its closure following a substantial $4.47 billion settlement with the SEC. This turn of events has shifted the spotlight onto Do Kwon, the founder of Terraform Labs, the company behind one of the prominent U.S.-pegged stablecoins. Once riding high with massive venture funding and his coins Terra and Luna valued in the billions, Kwon’s trajectory now faces scrutiny akin to other notable figures in the crypto sphere. Providing further insights on the same, a reporter from ‘The Street’ noted, “In April, the jury unanimously found Kwon and Terra labs guilty of securities fraud. Kwon has been hiding for years after the implosion of his two digital stablecoins – Luna and Terra.” Shedding light on the reasons behind the fallout of Terrform labs, the reporter added, “While stablecoins are backed by actual hard assets, Kwon’s coins turned out to be backed by a web of complex codes. When an algorithm failed in 2022, $40 billion of market value went poof.” The fraud involved misleading investors about Terraform’s blockchain and the stability of their cryptocurrency UST. When UST lost its peg to the U.S. dollar in May 2022, its value and that of Terraform’s other tokens crashed, wiping out about $40 billion in market value. Gensler’s frustration on the issue This caused significant financial losses for investors, including retail investors who trusted false information from Terraform Labs further fueling the hedge funds collapse and investors running for the…
Filed under: News - @ June 19, 2024 3:14 am