As the Terraform Labs versus United States Securities and Exchange Commission (SEC) trial nears its conclusion, attorneys have alleged that the crypto firm disseminated numerous false claims about its platform to investors.
According to a report from Reuters on April 5, SEC lawyers asserted in the U.S. District Court for the Southern District of New York that Terraform’s narrative was “built on lies.”
These falsehoods purportedly encompassed assurances regarding the stability of the algorithmic stablecoin TerraUSD (UST) and an integration with a South Korean payment application.
Louis Pellegrino, attorney for Terraform, reportedly defended co-founder Do Kwon’s public statements as truthful, suggesting that the SEC’s case relied on selectively presented information.
The civil trial against the SEC emerged over a year subsequent to the commission’s filing of a lawsuit against Terraform in February 2023.
“At that juncture, the regulator alleged that the platform and Kwon had “orchestrated a multi-billion dollar crypto asset securities fraud.”
Throughout the trial, SEC attorneys likened Terra to a “house of cards” that collapsed for investors in 2022.
The fallout from Terra’s demise contributed to a significant downturn in the crypto market, impacting entities such as FTX, BlockFi, Celsius, and others, which were subsequently compelled to declare bankruptcy.
The trial has proceeded in Kwon’s absence, as the Terraform co-founder remains in Montenegro pending a decision on extradition requests from the U.S. and South Korea.
Kwon was apprehended in March 2023 on charges related to the use of falsified travel documents.
In January, Judge Jed Rakoff postponed the start date of the SEC v. Terraform Labs trial to March 25, in a bid to accommodate Kwon.
Other prominent figures in the crypto sphere facing legal proceedings in the U.S. include former Celsius CEO Alex Mashinsky, slated for a criminal trial in January 2025, and former Binance CEO Changpeng Zhao, set for a sentencing hearing on April 30.
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