SEC Settlement: $10.5M for TerraUSD Misuse in MyConstant
Crypto lenders face tighter rules after a landmark SEC settlement. MyConstant founder Huynh Tran Quang Duy agreed to a $10.5M SEC settlement. He will disgorge $8.3M, pay $1.5M in prejudgment interest, and a $750,000 civil penalty within 14 days. MyConstant had raised over $20M from 4,000 U.S. investors for crypto loans offering 6–10% yields. Instead, Duy diverted $415,000 for personal use and deployed $11.9M in TerraUSD (UST) via Anchor Protocol. When UST collapsed in May 2022, nearly $8M of customer assets evaporated, prompting MyConstant’s shutdown. A Fair Fund may distribute recovered funds to investors. This SEC settlement underscores the risks of algorithmic stablecoins and crypto lending models and signals stronger regulatory scrutiny.
Bearish
The news of the SEC settlement against MyConstant founder underscores regulatory risks for algorithmic stablecoins like TerraUSD. This verdict is likely to dampen market sentiment around UST and similar assets in the short term. Traders may reduce exposure to algorithmic stablecoins amid concerns over regulatory enforcement. In the longer term, the case could prompt stricter oversight, limiting yield-generating DeFi strategies and increasing compliance costs. As a result, this development exerts bearish pressure on UST and related tokens.