The creators of the now-deprecated lending platform agree to pay more than $10.5 million to claim that they received investor funds to purchase millions of worth of Stubcointeraus before the US Securities and Exchange Commission collapsed.
Huynh Tran Quang Duy, also known as Duy Huynh, told clients of his company MyConstant that their money would go to a Crypto-backed loan matching service that generates 10%, the SEC said it had ordered on Tuesday.
The agency claimed that Huynh actually used $11.9 million in customer money to buy Terrausd (UST), a stablecoin tied to the Terra blockchain that collapsed in mid-2022 and wiped out billions of dollars.
MyConstant is one of several crypto-related businesses affected by Terra’s collapse, and is estimated to have washed away half a trillion dollars from the Crypto market.
The company has faced regulatory measures since late 2022, when California’s financial regulator accused them of violating state securities laws and ordered them to halt operations, which appears to allow MyConstant customers to see compensation.
Huynh pays millions of MyConstant customers
The SEC said Huynh, a Vietnamese and US citizen, has agreed to pay more than $8.3 million in wandering along with $1.5 million in interest to repay MyConstant customers.
He also had to pay a civil penalty of $750,000 within 14 days and did not acknowledge or deny the SEC’s findings.
MyConstant lost nearly $8 million at Terra Bet, the SEC says
According to the SEC, MyConstant claimed to provide a return of 6% to 10% by pooling and lending all Crypto-backed customer funds.
The investment touted as “low risk,” and between September 2020 and November 2022, MyConstant raised more than $20 million from more than 4,000 investors, the agency said.
The MyConstant AD, the SEC said, was distributed online. sauce: Seconds
Huynh spent $11.9 million on Terrausd purchase purchases, diverting personal investor funds for around $415,000, but lost more than $7.9 million on Terrausd purchases when the token price fell swiftly and drastically in May 2022.
Related: From Coinbase to Milei and Libra: Loading Crypto Class Action Suits
The SEC has sent an email summary showing the fake loans the company has made, claiming that Huynh “will try to “inspire investors to inspire them to reinvest in MyConstant.”
MyConstant stopped operations in mid-November 2022, citing the collapse of several crypto companies that year, then repatriated $8.8 million to investors, placing all the company’s assets in the trust of investors.
Terra provided a big yield on Stablecoin
The SEC did not detail how Huynh was said to have used Terrausd Holdings, but at the time of the suspicious scheme, Terra blockchain provided an Anchor Protocol with annual revenue of up to 20% on UST through its lending service.
Terra ultimately collapsed due to the lull in the crypto market and the users subtracting money from the blockchain ecosystem.
Terrausd was tied to the blockchain token Terra (Luna) by an algorithm aimed at keeping its value at $1, but the price of Luna caused Stablecoin to Depeg, causing a spiral of death for both tokens.
Terra co-founder Do Kwon is awaiting trial in the US for multiple fraud charges related to blockchain.
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