SEC Charges Terraform and CEO Do Kwon with Defrauding Investors InCrypto Schemes

https://www.sec.gov/news/press-release/2023-32

by npalli • 3 years ago

211 80 3 years ago

sec.gov

squeegee_scream• 3 years ago

This is https://www.terra.money/ which I don’t think has any affiliation with Hashicorp’s terraform

calciphus• 3 years ago

Thank you, I was deeply confused for a moment.

I almost had to click through to the article!

hanklazard• 3 years ago

definitely no affiliation.

danielodievich• 3 years ago

I was just in the middle of learning our own terraform provider with great enjoyment aka "under the loving strokes of a Dwarf's axe". Looking at my monitor, blurred with tears, I asked for help and a very good colleague saved me. Work done, beers owed, I checked HN, saw this and texted him this link with "speaking of terraform". Chuckles all around!

DantesKite• 3 years ago

Fun fact: South Korean government officials believe Do Kwon is currently hiding in Serbia.

https://www.bbc.com/news/business-63940181#:~:text=South%20K....

A_D_E_P_T3• 3 years ago

I've spent a lot of time in Serbia. Put it like this: If they put a bounty on his capture, Do Kwon isn't going to last five minutes. (I can tell you right now that he's 80% likely to be holed up in a condo in one of the new Belgrade Waterfront developments. He'd stick out like a sore thumb anywhere else.)

An interesting fact about Serbia is that all visiting foreigners are required to register at their neighborhood police station & provide the cops with an address, passport details, and contact details. Usually the hotels will do this for you automatically. Basically, though, what this means for Do Kwon is that he already has a searchable file.

Hey... Wait... do these new SEC charges mean that there is now a bounty? Maybe I ought to make some calls.

janmo• 3 years ago

The bounty has to be higher than the bribe Do Kwon can pay

Topgamer7• 3 years ago

Well with the amount of money he absconded, he can probably afford a passport of someone that looks relatively like him.

JumpCrisscross5• 3 years ago

he already has a searchable file

Wouldn’t one use an alias?

nradov3• 3 years ago

The foreigner address registration thing isn't actually enforced. No one bothers to do it anymore, at least not if they're staying at a private residence.

neom• 3 years ago

https://www.srbija-nekretnine.org/en/apartments/for-sale/bel...

Some nice places down there! Didn't realize Belgrade was so chic.

csomar• 3 years ago

all visiting foreigners are required to register at their neighborhood police station & provide the cops with an address, passport details, and contact details

Yeah, because a criminal mastermind is going to be bothered with a detail like that. Most tourist don't do this bureaucratic step.

pyuser583• 3 years ago

US bounties are not reliable. The government pays of it feels like it.

Bail bonds bounties are a different thing, but I don’t think federal courts use them

jacquesm4• 3 years ago

They are required to do so, but nobody ever does. I've been there for work several times over the last years and had checked up on that before going and people there told me not to bother and that the police really didn't care and might not even do the registration.

IncRnd2• 3 years ago

Take note, crypto people. The days of instructing people about how the code is the contract, centralized exchanges are DeFi, Web 3.0 fixes all the issues, etc. - those days appear to be numbered.

bouncycastle• 3 years ago

There was nothing DeFi about Terra. They coopted the term. The chain was completely centralized and controlled by them.

foobar1962• 3 years ago

those days appear to be numbered

There's a block chain for that!

Beaver117• 3 years ago

The SEC is awfully slow. They should have had enough to arrest him a long time ago and now he's probably living on billions in Russia or something

woodruffw• 3 years ago

Serbia as of December, it seems[1]!

[1] https://www.bbc.com/news/business-63940181

Cardinal7167• 3 years ago

My guess would be they’re not slow, they probably just waited to release this info publicly until it was prudent or didn’t have the potential to damage their case. Since he’s in hiding now it seems like that’s precisely why they’re going public, to smoke them out.

sokoloff• 3 years ago

“The wheels of justice turn slowly, but grind exceedingly fine.”

JumpCrisscross5• 3 years ago

they should have had enough to arrest him a long time ago

The SEC is a civil agency. It can't arrest anybody.

cormacrelf3• 3 years ago

They apply to a court to get a civil penalty. You can be arrested by a court for flouting a court order like “don’t leave the country pal”, once it has established jurisdiction through the service process. Detaining people to enforce court orders is one of the core powers of the judiciary. Bringing an action and serving him while he was inside the jurisdiction of the court would have been good.

paulpauper2• 3 years ago

The joke is that the SEC steps in only after the money is lost. Or their actions cause a stock to tank and everyone loses their money anyway. When the SEC halts trading on a penny stock, when it resumes trading is instantly worthless or close to it, so again people lose money. Basically, the SEC is useless at preventing people from losing money.

Scams will always exist and scammers will always find new ways to scam people, no matter how many warnings there are. Advance fee scammers find are now doing crypto giveaways in which a victim sends 'x' crypto in the promise of '2x 'more. Crypto is the latest iteration of penny stock pump and dump scams.

hef19898• 3 years ago

The SEC kind of steps in as soon as they have reason to investigate, they even have a rather profitable whistleblower program (profitable for the whistleblower who gets between 10 and 30% of every fine above 1 million). The SEC is a civil agency charged with protecting "investors", not defrauded customers. The latter is, to the best of my knowledge, referred to prosecutors by the SEC (I think the southern district of New York).

haasted• 3 years ago

They also seem to be going after Terraform Labs, which is an active legal entity in South Korea (Edit: Actually appears to be Singapore now). Impeding their current work on (I kid you not!) Terra 2.0 may still prevent a future ponzi meltdown.

unicornmama• 3 years ago

The SEC can only bring civil charges. Their enforcement actions are also procyclical: They collect the bodies.

paulpauper2• 3 years ago

Too bad the SEC cannot bring criminal charges. Not sure why criminal charges have not been filed yet

yieldcrv• 3 years ago

Are you sure they haven’t? There are commonly parallel cases not reported by the same outlet, you’d have to check the DOJ‘s website

JumpCrisscross5• 3 years ago

sure they haven’t?

No, but if they did, it was illegal and unenforceable and didn't go anywhere.

commonly parallel cases not reported by the same outlet, you’d have to check the DOJ‘s website

The SEC can make criminal referrals to the DoJ.

ac29• 3 years ago

South Korea issued an arrest warrant last year

ourmandave• 3 years ago

Fix the heading!

InCrypto s/b In Crypto

noloblo• 3 years ago

the pdf complaint https://www.sec.gov/litigation/complaints/2023/comp-pr2023-3...

colesantiago2• 3 years ago

Good.

But this isn't enough. need the SEC and the DoJ to go after and completely shutdown all crypto exchanges and charge the founders involved or abetting a gigantic quasi-ponzi scheme out of selling these fictitious tokens.

I think the govt needs to issue a wanted list for crypto, listing the founders and VCs who invested trying to make a giant profit out of it.

blackwateragent• 3 years ago

the SEC and the DoJ to go after and completely shutdown all crypto exchanges and charge the founders involved or abetting a gigantic quasi-ponzi scheme

Could you clarify? Are you implying all crypto is illegal? I don't deal with crypto myself, but I don't recall hearing any issues with companies such as coinbase, etc.

colesantiago2• 3 years ago

Yes they are, and they should be shutdown.

ReflectedImage• 3 years ago

That will teach you to do infrastructure as code!

bagels• 3 years ago

I'm guessing this is a joke, but "Terraform Labs" is being charged, not "Terraform", a product made by Hashicorp.

soggylaundry• 3 years ago

what about trademark infringement?

glenngillen• 3 years ago

Either way, I used to work on “Terraform” and had a heart in mouth moment here thinking I was about to get dragged into court for something. Phew!

sidcool• 3 years ago

Lol. Came here and to crack the same joke.

nailer3• 3 years ago

Terraform is more infrastructure as config file. Think CDK, Bicep or Pulumi for actual code.

wil4212• 3 years ago

Are configs not code? I’ve had tons of config files in code bases. Where would you draw the line?

steponlego• 3 years ago

This is just so stupid, EVERYBODY knows crypto is a giant scam. Why would they prosecute people for grifting a pigeon? Absolute waste of resources.

BLKNSLVR• 3 years ago

I was expecting this to have a "2022" year designation, but no, this was Feb 16th, 2023 (today).

https://chaindebrief.com/wp-content/uploads/2023/02/sec.png

For context: Kraken has been around since 2011 and therefore weathered many a cryptocurrency winter and is a beacon of trust in the storm of fraud and rug-pulls and other outright illegal and immoral behaviour seemingly inherent to the cryptocurrency industry.

drexlspivey• 3 years ago

Can courts in random countries charge you even if you are not a citizen or ever set foot there? Like can a random judge in Morocco charge you with a crime and then you visit Egypt and you end up arrested and extradited to Morocco? Not exactly what is going on here but there are other cases where this is happening (Assange for example)

SEC Charges Terraform and CEO Do Kwon with Defrauding Investors InCrypto Schemes

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