Co-founder of Terraform Labs, Do Kwon, has been sentenced to four months in prison by a court in Montenegro for his involvement in traveling with a counterfeit passport.
Han Chang-joon, who served as Chief Financial Officer (CFO) of Terraform Labs, was also found guilty of the same offense and received a four-month prison sentence.
Both of them were allegedly found with fake Costa Rican and Belgian passports when arrested in March.
According to the court, the duration of their sentences would consider the time they spent in custody.
However, both individuals can appeal against the verdict within eight days of receiving written notification from the court, reports Bloomberg.
Do Kwon is also facing fraud charges over the $40B crash of TerraUSD and Luna cryptocurrencies in May 2022 in the United States and South Korea.
Kwon faces extradition to the US and South Korea.
Terraform Labs: Orchestrated a multi-billion dollar crypto asset securities fraud
In February, US regulators charged Mr Kwon and his company, Terraform Labs, accusing them of “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
The Securities and Exchange Commission (SEC) has filed a complaint stating that Terraform Labs and Do Kwon engaged in fraudulent activities between April 2018 and the scheme collapse in May 2022.
During this period, they raised substantial funds from investors by offering and selling a range of interconnected crypto asset securities, many of which were unregistered transactions.
The SEC’s complaint highlights the sale of various securities, including “mAssets,” which were security-based swaps designed to mirror US companies’ stock prices, and Terra USD (UST), an “algorithmic stablecoin” that claimed to maintain its value by being exchangeable for another crypto asset security called LUNA.
The SEC’s complaint further alleges that Terraform and Kwon marketed crypto asset securities to investors seeking to earn a profit, repeatedly claiming that the tokens would increase in value.
Additionally, while marketing the LUNA token, Terraform and Kwon misled and deceived investors that a popular Korean mobile payment application used the Terra blockchain to settle transactions that would accrue value to LUNA. Meanwhile, Terraform and Kwon also allegedly misled investors about the stability of UST.
In May 2022, UST depegged from the US dollar and the price of its and its sister tokens plummeted close to zero.
“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful a host of crypto asset securities, most notably for LUNA and Terra USD,” says SEC Chair Gary Gensler. “We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”
Read the orginal article: https://siliconcanals.com/news/terraform-labs-co-founder-cfo-get-four-month-prison/
