Recently cryptocurrency The US Securities and Exchange Commission (SEC), which has not fallen off the agenda with its sanctions against the sector, has again taken a decision to impose sanctions.
SEC Sues Terra (LUNA) Founder and Distributor Company
The U.S. Securities and Exchange Commission is set to sue the company behind the crypto stablecoin TerraUSD, whose collapse last year sparked an industry-wide crisis and top bankruptcies.
According to people familiar with the matter, the SEC is investigating whether Terraform Labs, the company behind the coin, misled investors about its stablecoin’s ability to hold a 1-to-1 peg to the US dollar. The lawsuit will claim that TerraUSD should be registered with the agency, according to the sources.
“Terraform Labs has not been contacted by the SEC about such a transaction and is therefore unable to comment,” the company said in a statement. The SEC declined to comment. While the case is in its final stages, timing and plans are subject to change.
The SEC’s complaint alleges that Terraform and Kwon are marketing crypto-asset securities to investors looking to make a profit, and have repeatedly claimed that the value of the tokens will increase. For example, they launched and marketed UST as a “yielding” stablecoin, which they advertised as paying up to 20 percent interest through the Anchor Protocol.
SEC Chairman Gary Gensler said:
“We contend that Terraform and Do Kwon have failed to provide the full, fair and accurate disclosure required for a range of crypto-asset securities, primarily LUNA and Terra USD.
We also argue that they are committing fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.
I commend the SEC’s hard-working staff, who, in such an important investigation, remained vigilant even as defendants tried to prevent us from obtaining important information about their work.
While this case demonstrates how far some crypto firms will go to avoid complying with securities laws, it also demonstrates the strength and determination of the SEC’s dedicated public officials.”
In addition, the SEC says the defendants were engaged in a fraudulent scheme that resulted in at least $40 billion in market value loss.
*Not investment advice.
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