In a swift decision, a Manhattan federal jury found bankrupt cryptocurrency startup Terraform Labs and its founder, Do Kwon, liable for securities fraud. The verdict, reached in less than two hours of deliberation, follows claims by the U.S. Securities and Exchange Commission (SEC) that Terraform Labs misled investors about the stability and prospects of its cryptocurrency, UST. The SEC alleged that Terraform Labs falsely promoted UST as "stable" and pegged to the U.S. dollar.
During the trial, the SEC argued that Terraform Labs' claims of stability were propped up not by technological prowess but by a secret capital infusion from Jump Trading. The defense contended that the SEC's case was an attempt to penalize Terraform for a legitimate business failure. The jury sided with the SEC, holding Terraform and Kwon liable. Now, with the liability verdict secured, Judge Jed S. Rakoff will determine the civil penalties Terraform and Kwon may face in the coming weeks.
EKO was proud to represent the SEC's star investor witness in the trial.
EKO represents cryptocurrency investors in several matters, including Pearl v. Coinbase and Donovan v. GMO Trust, both of which involve so-called stablecoins that failed to keep their pegs to underlying fiat currencies.
If you are an investor with claim against the issuer or exchange of a digital asset, check us out. We love a good fight.
