The SEC’s action against Do Kwon and Terra creator Terraform Labs will go forward, the judge decided today.
In case you forgot, the SEC alleges that Terraform and Kwon conned investors out of billions of dollars via a scheme using algorithmic stablecoins and other forms of cryptocurrency-based securities.
By promoting and selling a bundled suite of crypto-asset securities, sometimes in unregistered transactions, they purportedly collect billions of dollars from investors.
These include “mAssets,” which are security-based swaps designed to produce returns by expressing the price of U.S. companies’ stocks, and “algorithmic stablecoins,” which are said to continue to rely on the U.S. dollar despite the fact that they can be traded for another crypto-asset security, LUNA’s Terra USD (UST).
Gary Gensler, head of the Securities and Exchange Commission, had this to say about the February lawsuit:
“We claim that Terraform and Do Kwon did not provide the necessary complete, fair, and accurate information for several crypto-asset securities, most notably LUNA and Terra USD.
We further contend that they are engaging in fraud by adopting deceptive practices to gain investors’ confidence prior to wreaking devastation on their portfolios.”
The court in the lawsuit between the SEC and Terraform Labs ruled that exchange-purchased tokens have the same connection to the token issuer as tokens purchased directly from the token issuer.
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