The United States Securities and Exchange Commission has completed a settlement with the founder of MyConstant and orders him to pay more than $ 10 million in fines and refund for the abuse of investor funds and making false claims about the crypto -credit services of his platform.
Summary
- MyConstant founder Huynh Tran Quang Duy pays more than $ 10 million for abuse of investor funds.
- Huynh used $ 11.9 million in investors funds to buy Terrausd and lost almost $ 8 million when the Stablecoin collapsed.
- MyConstant stopped the activities in 2022; The SEC scheme includes disgorgement and other restrictions.
What is MyConstant?
MyConstant was a peer-to-peer loan platform that operated under the name Con LLC. Founded in 2018 by Huynh Tran Quang Duy, also known as Duy Huynh, the platform claimed to offer investment options with a high return by matching matching lenders and borrowers through crypto-collateral loans.
It advertised annual returns ranging from 6% to 10% and described its products as low risk and secured by cryptocurrencies. The platform was mainly aimed at American investors and eventually attracted more than $ 20 million of more than 4,000 people between 2020 and 2022.
Despite the marketing itself as a crypto-secured Leen Matching service, Mycontant Pooled Investor Funds has pooled and performed full control over how that money was allocated.
According to the SEC, the company has not consistently issued loans issued by crypto -under building, as advertised. Instead, Huynh has diverted large parts of the funds to personal accounts and risky crypto assets, so that the representations were violated to investors.
He also generated manufactured loans and marketing updates to maintain the trust of investors and to encourage reinvestment.
Allegations against MyConstant and Hyunh
Sec found That Huynh darkened around $ 415,000 for personal use and used at least $ 11.9 million investors funds to buy the Algorithmic Stablecoin Terrausd (UST).
This movement was in contradiction with the declared business model and the risk profile of MyConstant.
When UST collapsed in May 2022, Huynh lost almost $ 8 million to customer funds. Nevertheless, he continued to reassure investors the stability of the platform by issuing misleading performance reports that claim a successful loan activities.
The UST purchases from Huynh were found to be an attempt to deliver the promised returns. At the time, Terrausd offered up to 20% annual returns via Anchor Protocol, a Defi -credit platform bound to the Terra Blockchain.
However, the value of UST depended on the PEG to the US dollar, maintained by an algorithm linked to Terra’s Native Token, Luna. In May 2022, a sharp market crash caused an extraction event that made both tokens collapsed. MyConstant’s exposure to UST became a catastrophic liability and the platform eventually stopped in November 2022.
Previous actions against MyConstant
MySconstant had already attracted the attention of supervisors at state level prior to the investigation of the SEC.
In December 2022, the California Department of Financial Protection and Innovation published an end-and-desistal order against the company. The DFPI accused MySconstant of violating California’s securities by offering unregistered interest-bearing crypto products and working as a broker without a permit.
Towards the end of 2022, MyConstant admitted that it could no longer work as normal and paused recordings of users in the midst of a wave of market turbulence and customer statements. Until now, it has returned $ 1.8 million to investors and remaining assets – with a wise less than $ 10 million – in a trust for potential recovery.
The settlement of the SEC marks the first formal action that can lead to a broader refund for affected investors.
What is the next step for Huynh?
According to the terms of the SEC order, Huynh has to pay $ 8.3 million to Disgorgement, $ 1.5 million in prejudice interest and a civil fine of $ 750,000 within 14 days. However, he agreed with the settlement without admitting or refusing the allegations of the SEC.
In addition to the financial fines, Huynh is excluded from serving as an officer or director of a publicly registered company. The SEC can also set up an honest fund to distribute recovered funds to investors, depending on the feasibility.
