US SEC Launches Investigation into Terra's Kwon Do-hyung... "Probe into Investor Protection Regulation Violations"
[Asia Economy Reporter Jeong Hyunjin] The U.S. Securities and Exchange Commission (SEC) has launched an investigation into Do Kwon, CEO of Terraform Labs and developer of the crashed cryptocurrency TerraUSD (UST), regarding potential legal violations, Fortune reported on the 9th (local time).
Fortune cited an anonymous source stating that the SEC is investigating whether Terraform Labs violated federal investor protection regulations during Terra's marketing process. The source said that SEC enforcement attorneys are examining whether Terraform Labs breached securities and investment product regulations.
The collapse in Terra's value, which began on the 7th of last month, shook the entire cryptocurrency market. U.S. Treasury Secretary Janet Yellen previously stated that this incident exposed the risks of cryptocurrencies pegged to the U.S. dollar.
Fortune pointed out that the SEC's current investigation could put greater pressure on Terraform Labs and CEO Kwon. Regulators have already been investigating Terraform Labs and CEO Kwon in connection with the decentralized finance platform "Mirror Protocol," a cryptocurrency project they provide.
However, Fortune reported that Terraform Labs stated they are unaware of the SEC's ongoing investigation related to Terra. CEO Kwon also told Fortune, "We have not received any contact from the SEC, and we are not aware of any new investigations beyond the one related to Mirror Protocol."
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Meanwhile, the U.S. Court of Appeals for the Second Circuit dismissed CEO Kwon's appeal against the SEC's subpoena related to the Mirror project the day before. Earlier, in February, the trial court ruled that Terraform Labs and CEO Kwon must submit documents and testify to the SEC regarding Mirror Protocol. CEO Kwon appealed this decision, but the appellate court again ruled that CEO Kwon and Terraform Labs must comply with the SEC's investigation into Mirror Protocol.
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