As the trial between Terraform Labs and the United States Securities and Exchange Commission (SEC) nears its conclusion, legal representatives accused the crypto company of making deceptive statements about their platform to investors.

Based on an article by Reuters on April 5, SEC attorneys stated in U.S. District Court for the Southern District of New York that Terraform’s narrative was constructed on untruths. These falsehoods included the reliability of algorithmic stablecoin TerraUSD (UST) and a partnership with a South Korean payment application. Terraform attorney Louis Pellegrino argued that co-founder Do Kwon had been honest in public declarations, and the SEC's argument was based on misinterpreted information.

The civil dispute with the SEC occurred over a year after the commission initiated a lawsuit against Terraform in February 2023. The SEC accused the platform and Kwon of coordinating a massive crypto asset securities fraud.

Throughout the trial, SEC attorneys likened Terra to a fragile structure that crumbled for investors in 2022. The collapse of Terra contributed to a significant decline in the crypto market that impacted FTX, BlockFi, Celsius, and other companies that had to declare bankruptcy.

The legal procedures have continued without Kwon being physically present. The Terraform co-founder remains in Montenegro while authorities determine whether to approve an extradition request from the U.S. or South Korea. Kwon was apprehended in March 2023 for utilizing forged travel documents.

In January, Judge Jed Rakoff postponed the start date of the SEC v. Terraform Labs trial to March 25 to accommodate Kwon. Other prominent figures in the crypto industry facing legal actions in the U.S. include former Celsius CEO Alex Mashinsky for his criminal trial in January 2025 and former Binance CEO Changpeng Zhao for an April 30 sentencing hearing.