SEC Charges Do Kwon, Terraform With Fraud In Connection With Terra Collapse (cnbc.com) 13
The Securities and Exchange Commission charged Terraform Labs and its CEO, Do Kwon, with fraud, alleging that they orchestrated a multibillion dollar "crypto asset securities fraud," the SEC said Thursday. CNBC reports: Kwon and Terraform allegedly schemed from Apr. 2018 until the collapse of TerraUSD, also known as UST, and its sister coin luna in May 2022 to raise billions of dollars from investors through the offer and sale of an "inter-connected suite" of crypto asset securities, including securities-based swaps that mirrored U.S. equities, and most famously, the so-called "algorithmic stablecoin" Terra USD. The company advertised UST as a "yield-bearing" coin, offering to pay interest of up to 20 percent, according to the complaint.
Like many stablecoins, UST was pegged at a 1-to-1 ratio with the dollar. Minting one new UST required "burning," or destroying, one luna. This structure allowed for arbitrage opportunities that were key to maintaining the peg: Users could always swap one luna for UST and vice versa at a guaranteed price of $1, regardless of the market price of either token at the time. But the price of luna grew unstable and forced UST to break its $1 peg, an effort which sent both terra and luna spiraling.
The complaint against Kwon and Terraform was filed in federal court for the Southern District of New York in Manhattan, and charges both with violating the registration and anti-fraud provisions of both the Securities and Exchange Acts. The SEC alleges that Kwon marketed those assets, including those mAsset swaps and Terra, as profit-bearing securities, "repeatedly claiming" the tokens would increase in value. [...] Kwon's current whereabouts are unknown, but the Terra co-founder was recently believed to be in Serbia, according to South Korean intelligence. Kwon is wanted in South Korea for his involvement in the collapse of TerraUSD.
Like many stablecoins, UST was pegged at a 1-to-1 ratio with the dollar. Minting one new UST required "burning," or destroying, one luna. This structure allowed for arbitrage opportunities that were key to maintaining the peg: Users could always swap one luna for UST and vice versa at a guaranteed price of $1, regardless of the market price of either token at the time. But the price of luna grew unstable and forced UST to break its $1 peg, an effort which sent both terra and luna spiraling.
The complaint against Kwon and Terraform was filed in federal court for the Southern District of New York in Manhattan, and charges both with violating the registration and anti-fraud provisions of both the Securities and Exchange Acts. The SEC alleges that Kwon marketed those assets, including those mAsset swaps and Terra, as profit-bearing securities, "repeatedly claiming" the tokens would increase in value. [...] Kwon's current whereabouts are unknown, but the Terra co-founder was recently believed to be in Serbia, according to South Korean intelligence. Kwon is wanted in South Korea for his involvement in the collapse of TerraUSD.
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They're called stablecoins because... (Score:3)
...just like the place you keep a horse, they're full of horse shit.
Also, how dumb do you have to be to invest in a coin that ostensibly has a fixed value? "Oh, someday my $1 coin might be worth... $1? Shut up and take my money! [giphy.com]"
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Also, how dumb do you have to be to invest in a coin that ostensibly has a fixed value?
No one does. Update your knowledge base
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For the user, a $1 coin is a $1 coin. However, the stablecoin owner is banking on the fact that people won't be pulling all their stuff out of the stablecoins all at once. This way, if users might want 10% of their coins converted back to USD, the rest of that can be loaned out, or never exist as dollars in the first place, so a stablecoin might have $100 in coins, but only $10 in real dollars backing it. The rest of the coins, that $$$ can be slurped off for other things.
This mirrors the banking industr
Here's an idea (Score:3)
Could we just ignore stories about how something crypto related turned out to be a huge scam? That way I guess we'll never have to hear about this bullshit again.
No commercial value (Score:2)
Turns out blockchain is not really useful for real world applications.
The only value crypto has is money laundering for criminals and rogue nation states, cryptolocker payouts, and fraud. It turns out that market is pretty big so crypto will work for criminals until the world figures out that's all it's good for. Then, it should be banned by civilized nations.
https://www.youtube.com/watch?v=tspGVbmMmVA
https://web3isgoinggreat.com/
Ho Hum... (Score:2)
another day, another cryptastrophy.
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You already said that: https://news.slashdot.org/comm... [slashdot.org]
These crypto stories are just vehicles for karma whoring