SEC Reaches Settlement With MyConstant Founder
The founder of defunct crypto lending platform MyConstant has agreed to pay over $10.5 million to settle charges brought by the US Securities and Exchange Commission (SEC). The SEC alleged that Huynh Tran Quang Duy, also known as Duy Huynh, misused investor funds to purchase the stablecoin TerraUSD (UST) before its high-profile collapse in 2022.
Investor Funds Used for Stablecoin Purchases
According to the SEC, MyConstant collected more than $20 million from over 4,000 investors between September 2020 and November 2022. The company promised customers annual yields of 6% to 10% by matching loans backed by cryptocurrencies. MyConstant advertised the investment as 'low risk.'
Instead, the regulator claimed Huynh spent $11.9 million of clients� money buying TerraUSD, a stablecoin designed to maintain a 1:1 peg with the US dollar. In May 2022, TerraUSD lost its peg and collapsed along with its linked token, Terra (LUNA), erasing billions in market value and triggering losses for many crypto firms. MyConstant reportedly lost more than $7.9 million in the collapse.
SEC Alleges Misrepresentation and Misappropriation
The SEC said Huynh also misappropriated around $415,000 for personal use. After TerraUSD�s failure, he allegedly issued misleading statements to investors. These included false reassurances about the safety of funds and summaries showing fake loans.
MyConstant ceased operations in November 2022, following regulatory action in California, and has since returned $1.8 million to investors. All company assets were placed in a trust for investor repayment.
Settlement Details and Restitution
Without admitting or denying the SEC�s findings, Huynh agreed to pay over $8.3 million in disgorgement, $1.5 million in prejudgment interest, and a $750,000 civil penalty. The settlement may mark the first opportunity for many MyConstant investors to receive restitution since the platform�s shutdown.
Wider Implications of TerraUSD Collapse
TerraUSD's fall in 2022 destabilized several crypto-linked businesses. MyConstant was among those affected, as many platforms were exposed to TerraUSD and its associated Anchor Protocol, which had promised high returns to stablecoin holders.
Terra co-founder Do Kwon faces separate fraud charges in the US related to the algorithmic stablecoin's design and collapse.
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