$10m SEC settlement hits MyConstant founder over TerraUSD investment and misuse of funds

The United States Securities and Exchange Commission has finalized a settlement with the founder of MyConstant, ordering him to pay over $10 million in penalties and restitution for misusing investor funds and making false claims about his platform’s crypto lending services.

What is MyConstant?

MyConstant was a peer-to-peer lending platform that operated under the name Const LLC. Founded in 2018 by Huynh Tran Quang Duy, also known as Duy Huynh, the platform claimed to offer high-yield investment opportunities by matching lenders and borrowers through crypto-collateralized loans.

It advertised annual returns ranging from 6% to 10%, describing its products as low-risk and secured by cryptocurrencies. The platform primarily targeted U.S. investors and ultimately attracted over $20 million from more than 4,000 individuals between 2020 and 2022.

Despite marketing itself as a crypto-secured loan matching service, MyConstant pooled investor funds and exercised full control over how that money was allocated.

According to the SEC, the company did not consistently issue loans backed by crypto collateral as advertised. Instead, Huynh diverted large portions of the funds into personal accounts and high-risk crypto assets, violating the representations made to investors.

He also generated fabricated loan summaries and marketing updates to maintain investor confidence and encourage reinvestment.

Allegations against MyConstant and Hyunh

The SEC found that Huynh misappropriated approximately $415,000 for personal use and used at least $11.9 million of investor funds to purchase the algorithmic stablecoin TerraUSD (UST). 

This move contradicted MyConstant’s stated business model and risk profile. 

When UST collapsed in May 2022, Huynh lost nearly $8 million in customer funds. Despite this, he continued to falsely reassure investors of the platform’s stability by issuing misleading performance reports that claimed successful loan activity.

Huynh’s UST purchases appeared to be an attempt to deliver the high returns MyConstant promised. At the time, TerraUSD offered up to 20% annual returns through Anchor Protocol, a DeFi lending platform tied to the Terra blockchain.

However, UST’s value depended on its peg to the U.S. dollar, maintained through an algorithm linked to Terra’s native token, LUNA. In May 2022, a sharp market crash triggered a depegging event that caused both tokens to collapse. MyConstant’s exposure to UST became a catastrophic liability, and the platform ultimately ceased operations by November 2022.

Past actions against MyConstant

MyConstant had already drawn the attention of state-level regulators prior to the SEC’s investigation. 

Back in December of 2022, the California Department of Financial Protection and Innovation issued a cease-and-desist order against the firm. The DFPI accused MyConstant of violating California securities laws by offering unregistered interest-bearing crypto products and operating as an unlicensed loan broker.

By late 2022, MyConstant admitted it could no longer operate as normal and paused user withdrawals amid a wave of market turbulence and customer redemptions. So far, it has returned $1.8 million to investors and placed remaining assets—reportedly less than $10 million—in a trust for potential recovery. 

The SEC’s settlement marks the first formal action that could lead to wider restitution for affected investors.

What’s next for Huynh?

Under the terms of the SEC’s order, Huynh must pay $8.3 million in disgorgement, $1.5 million in prejudgment interest, and a $750,000 civil penalty within 14 days. However, he consented to the settlement without admitting or denying the SEC’s allegations. 

In addition to the financial penalties, Huynh is barred from serving as an officer or director of any publicly registered company. The SEC may also establish a Fair Fund to distribute recovered funds to investors, depending on feasibility.