The US Securities and Exchange Commission (SEC) seems to have taken a cryptocurrency into its lens. On February 16, the SEC filed a complaint against Terraform Labs, which is behind altcoin LUNA. Here are the details…
Complaint from SEC for altcoin
The SEC announced on Feb. 16 that Terraform Labs PTE Ltd. and its founder, Do Kwon. The SEC claimed that the defendants offered and sold crypto-asset securities in informal transactions and committed a fraudulent scheme. The editor said:
Defendants’ crypto-asset securities offerings included a set of interrelated tokens created, developed, promoted, offered and sold by Defendants as for-profit investments.
According to the SEC filing, the defendants violated the securities offering registration provisions of the federal securities law. The SEC said before the collapse of several Terraform projects in May 2022, Kwon and the company had raised billions of dollars by selling securities. cryptocoin.com As we reported, Terraform Labs is best known for its massively devalued Terra USD stablecoin (USTC), which is currently worth just $0.03 instead of the targeted $1.00 price peg. The project has also sold other assets, including the altcoin now known as Terra Classic (LUNC, formerly LUNA), plus MIR or Mirror tokens and “mAsset” swaps tied to the value of the stocks.
Will Do Kwon and Terraform Labs reconcile?
The SEC’s complaint specifically accuses Kwon and Terraform Labs of marketing crypto securities to for-profit investors and advertising that assets will rise in value. The collapse of various assets means that the team was unable to fulfill this promise. Today’s announcement only exposes the charges against the project. Terraform Labs and Kwon have not said whether they are considering a settlement with the SEC, and the SEC has not disclosed the amount of penalties included in any potential settlements.
The SEC also cited losses suffered by individual investors, including a California pharmacist who borrowed $400,000 against the value of his home to purchase Terra USD, and a Vermont painter who invested $20,000 in Terra USD to pay for his son’s college education. Terraform and Kwon marketed Terra USD as an “efficient” stablecoin. Introduced as “crypto-asset securities” to make a profit
To the extent that Terraform Labs is operational, it can fight charges in court, as Ripple and others have done. Terraform Labs actually tried to sue the SEC in 2021 for the way it publicly presented a subpoena to Kwon. However, now that it has collapsed and has little left to defend, it is unlikely that the project will take a more ambitious fight against the regulator. Despite its failure, various original tokens of Terra and an animated version of LUNA are still trading in the market. Each asset has only a fraction of the value it had before May 2022.
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