US Sues Luna Cryptocurrency Founder for ‘Billionaire Fraud’

So far, Interpol was the only entity going after Terraform Labs CEO Do Kwon .


 Now it is the Securities and Exchange Commission ( SEC ) of the United States that joins the process.

The United States has decided to join the international search for the founders of the Luna ( Terra ) cryptocurrency: the Securities and Exchange Commission ( SEC ) accused its CEO Do Kwon of billionaire fraud.

According to the agency, the company “misled investors” by developing a stablecoin called TerraUSD , which was supposed to always be worth the US dollar .


Terraform Labs and Do Kwon failed to provide “full, fair, and truthful disclosure” of their crypto asset values, SEC Chairman Gary Gensler said. The charges include registration and anti-fraud violations of the Securities Law and the Exchange Law.

The firm, the SEC adds , also misled people by claiming that its Luna token would gain value thanks to a Korean mobile payment app that used the Terra blockchain to settle transactions.

TerraUSD and Luna lost their peg to the US dollar in May 2022, with prices for both falling to near zero. Investors filed complaints accusing Terraform and Kwon of running a Ponzi scheme, and the freefall contributed to the collapse of cryptocurrency hedge fund Three Arrows Capital.

While Kwon insisted he was not evading capture, he left his native South Korea, refused to face questions from investigators and was placed on Interpol’s “red notice” list.

cryptocurrency fraud

The SEC charges join a series of efforts to crack down on reported fraud among some of the biggest names in the crypto industry.

Authorities have most notably gone after FTX and its founder, Sam Bankman-Fried, for that exchange’s downfall , while former Celsius Network boss Alex Mashinsky is also accused of defrauding investors .

While cryptocurrencies may still have a future, it is clear that government bodies want stricter enforcement of financial laws in this field.