MyConstant Founder Fined $10M for Misusing TerraUSD Funds
MyConstant founder Duy Huynh reached a $10 million settlement with the US SEC after misusing TerraUSD funds. He used $11.9 million of investor capital to buy the TerraUSD stablecoin, which collapsed in May 2022, wiping out $7.9 million. Huynh also diverted $415,000 for personal expenses and sent misleading updates to mask losses. Under the agreement, he will repay over $8.3 million plus $1.5 million in interest and pay a $750,000 civil penalty. He neither admitted nor denied the SEC’s findings. MyConstant had raised more than $20 million from over 4,000 users in a low-risk loan program offering up to 10% returns. This SEC settlement over the misuse of TerraUSD funds underscores rising regulatory scrutiny. Traders should watch for similar enforcement actions as regulators target crypto lending and stablecoin risk. The case highlights how stablecoin collapses can trigger investor losses and market volatility.
Bearish
This enforcement action highlights intensifying regulatory scrutiny on crypto lending platforms and stablecoin management. The misuse of TerraUSD funds and the resulting $7.9 million loss underscore risks tied to algorithmic stablecoins and unaudited loan protocols. Traders may view this settlement as a warning sign, prompting reduced exposure to similar platforms and stablecoin-backed lending products. Historically, cases like FTX’s collapse and TerraUSD’s 2022 crash have triggered short-term sell-offs and tighter risk controls. In the long term, stronger compliance could stabilize markets, but near-term sentiment will likely remain cautious. Overall, the news is bearish for crypto lending and stablecoin trust.