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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