A judge in New York sided with the Securities and Exchange Commission on the following argument: Terraform Labs and its co-founder Dohyung Kwon offered and sold unregistered securities.
Judge Jed Rakoff of the U.S. District Court for the Southern District of New York granted summary judgment to the SEC on those claims and sided with Terraform on “claims related to the offering and execution of security-based swap transactions.” Bespeak Submitted on Thursday.
“There is no real dispute that UST, LUNA, wLUNA and MIR are securities because they are investment contracts,” Rakoff said.
The court denied both sides’ motions for summary judgment on the fraud charges, which will now go to a jury, according to the filing.
The SEC indicted Terraform Labs and its CEO Do-Do Kwon. february About Terra USD, an algorithmic stablecoin that collapsed in dramatic fashion last year. The agency said that Kwon and Terraform coordinated. “Billion dollar cryptocurrency securities fraud” It “offers and sells interconnected crypto-asset securities, many of them in unregistered transactions,” earning billions of dollars in revenue from investors. These included “mAssets,” which the SEC revealed earlier this year were security-based swaps designed to pay returns by mirroring U.S. company stock prices and the infamous Terra USD price.
Algorithmic stablecoin
Algorithmic stablecoins, such as Terra USD, use market incentives through algorithms to maintain stable prices. Terra has been linked to Luna, a governance token, to keep the price stable. Terra USD crashed in May, causing billions of dollars in losses.
A jury trial on the remaining claims in the lawsuit is scheduled to begin January 24, 2024.
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About the author
Sarah is a reporter for The Block covering policy, regulation and legal events. Sarah was previously a reporter writing about securities regulation at CQ Legal, where she first began her reporting on cryptocurrencies. She Sarah has also written for The Bond Buyer and American Banker, among other financial publications. She graduated from the University of Missouri with a degree in Print and Digital Journalism. Sarah lives in Washington, DC and she is an avid coffee lover. You can follow her on Twitter @ForTheWynn.