Judge Jed Rakoff, who is investigating the SEC’s case against Terraform Labs’ former CEO Do Kwon, favors the regulator. In accordance with the ruling, Kwon and Terraform proceeded with the sale of uncertified securities related to LUNA and MIR tokens.
The Securities and Exchange Commission alleged that Terraform conducted unlisted safety-focused swap transactions and defrauded key investors involved.
According to Rakoff, the SEC obtained a preliminary ruling on Amended Complaint IV, which addresses Defendants’ unlawful sale of LUNA and MIR and their private offering in violation of Sections 5(a) and (5c). ) Securities Act.
As Rakoff points out, UST, wLUNA, LUNA, and MIR are all investment contracts and therefore securities. This is what he calls an investment deal that passes the Howey test.
This trial will examine the illegal aspects filed by the SEC against Mr. Kwon and Terraform in February 2023.
According to Rakoff, the defendants attempted to make it appear that the USTs were not securities because the customers knew that the value of the USTs would not increase and would remain at $1.
However, starting in March 2021, UST holders will be able to deposit their tokens into the Anchor Protocol, which, according to Professor Kwon, will result in the highest stablecoin yield, targeting an APR of 20%.
The SEC appealed a judge’s ruling regarding the securities issuance, avoiding a jury deciding the issue.
The jury selection process begins January 24th, and the trial begins January 29th.
Unlike claims related to the offering and sale of unlisted securities swaps, illegality claims are a problem that needs to be addressed, according to Rakoff.
The court dismissed the defendant’s appeal to ignore two SEC experts and the SEC’s appeal to remove one of the defendant’s experts. Rakoff was joined by Raj Unny and Dr. Rakoff, representing the defense. It was agreed to get rid of Christine Parlor.