#SEC has accused #DoKwon of fraud with the #Chai project
In an updated lawsuit against Do Kwon, the SEC alleges that the founder of #Terraform Labs conducted fake transactions for the Chai partner payment platform.
According to the agency, the heads of the two companies misled investors by showing that payments were being made on the Terra blockchain. In reality, the transactions were settled "traditionally," the regulator noted.
Among the evidence, the SEC attached screenshots of Kwon's correspondence with another Terraform co-founder, Daniel Shin. The latter created and headed the payment platform.
"I can just create fake transactions that look real and charge fees for them. We can scale this as Chai grows," the then Terraform #CEO said in the messages.
In response, Shin expressed concern that users would find out about the falsification of operations.
"All the power is with those who can prove that it's a fake. So I'll try to make it unnoticed. I won't tell if you don't," Kwon said.
The partnership between Terraform and Chai ended in 2020. However, according to the SEC, the collaboration lasted long enough to effectively implement the fraud scheme. According to the Commission, investors bought LUNA and other tokens "for hundreds of millions of dollars," believing that the corresponding Chai transactions were being executed on the Terra blockchain.
In February, the SEC charged Kwon with securities fraud. The agency included LUNA and the algorithmic stablecoin TerraUSD (UST) in the latest charges.
Since May 2022, South Korean authorities have been investigating the collapse of the Terra ecosystem, which triggered the crypto market crash. In September, the prosecutor's office issued an arrest warrant for Kwon and five other Terraform employees. The former CEO of the company was detained in Montenegro in March 2023. Subsequently, the US prosecutor's office filed criminal charges against him.
According to South Korean law enforcement officials, the founder of Terraform may face multiple prison sentences in both countries. $LUNC $LUNA
In an updated lawsuit against Do Kwon, the SEC alleges that the founder of #Terraform Labs conducted fake transactions for the Chai partner payment platform.
According to the agency, the heads of the two companies misled investors by showing that payments were being made on the Terra blockchain. In reality, the transactions were settled "traditionally," the regulator noted.
Among the evidence, the SEC attached screenshots of Kwon's correspondence with another Terraform co-founder, Daniel Shin. The latter created and headed the payment platform.
"I can just create fake transactions that look real and charge fees for them. We can scale this as Chai grows," the then Terraform #CEO said in the messages.
In response, Shin expressed concern that users would find out about the falsification of operations.
"All the power is with those who can prove that it's a fake. So I'll try to make it unnoticed. I won't tell if you don't," Kwon said.
The partnership between Terraform and Chai ended in 2020. However, according to the SEC, the collaboration lasted long enough to effectively implement the fraud scheme. According to the Commission, investors bought LUNA and other tokens "for hundreds of millions of dollars," believing that the corresponding Chai transactions were being executed on the Terra blockchain.
In February, the SEC charged Kwon with securities fraud. The agency included LUNA and the algorithmic stablecoin TerraUSD (UST) in the latest charges.
Since May 2022, South Korean authorities have been investigating the collapse of the Terra ecosystem, which triggered the crypto market crash. In September, the prosecutor's office issued an arrest warrant for Kwon and five other Terraform employees. The former CEO of the company was detained in Montenegro in March 2023. Subsequently, the US prosecutor's office filed criminal charges against him.
According to South Korean law enforcement officials, the founder of Terraform may face multiple prison sentences in both countries. $LUNC $LUNA