SEC Says Terraform Labs and Its Founder Built ‘House of Cards’ as Civil Fraud Trial Opens

[SEC trial counsel Devon] Staren said that in Terraform’s first fraud scheme, the company falsely claimed that the Terra blockchain was being used for real-world transactions on the South Korean payment app Chai.

“The evidence will show that Do Kwon led the development of the Chai payment system … [and] knew that Korean customers and merchants were using Korean won, not crypto,”

Staren said. Staren said that Kwon and his colleagues faked transactions on the blockchain “to back up their lies” and make it appear that crypto assets had been used instead of won.

In the second scheme, Staren said the defendants presented the opportunity to buy UST, a stablecoin pegged to the U.S. dollar, as “risk-free” while hiding what was happening behind the scenes.

“The evidence will show that the defendants lied again to make investors think that UST was stable and self healing,” Staren said.

Source: SEC Says Terraform Labs and Its Founder Built ‘House of Cards’ as Civil Fraud Trial Opens | New York Law Journal