Securities in the United States and Exchange Commission sued This company is behind TerraUSDA crypto stablecoin called. Its collapse in the last year has triggered an industry wide crisis. and A series of prominent bankruptcies.
The SEC According to federal courts, Terraform Labs is the company that created the token. and His co-founder Do Kwon Offered and Selling unregistered securities and A fraudulent scheme was used to wipe out the market’s value of at least $40 Billion, along with other serious losses. for Retail and both and Institutional investors
The company was accused by the agency and Kwon Investors are being misled about stability and other matters TerraUSD Stablecoin was advertised as having a 1-to-1 peg with the US Dollar.
“Terraform Labs has not been contacted about such a proceeding by the SEC and thus cannot comment,” When Bloomberg was asked about the statement, the company stated that it had received no prior information. SEC The lawsuit is filed.
TerraUSDUST (or UST) was meant to keep its peg using an algorithm and trading in a sister token called Luna — an experiment that failed spectacularly when the stablecoin crashed last May, sparking a massive selloff. The token’s implosion kicked off a domino effect across crypto markets. Directly or indirectly it fueled bankruptcies at high-profile firms like Voyager Digital hedge fund and Three Arrows Capital. and, most prominently, Sam Bankman-Fried’s Alameda Research and FTX.
In the meantime, SEC’s case is a significant development in Washington’s mushrooming regulatory crackdown as Wall Street’s main regulator would effectively be asserting its jurisdiction over certain stablecoins, which are It is an important part of how cryptocurrency markets operate.
Even before FTX’s collapse, the US government was grappling with how best to regulate stablecoins, which the Treasury Department and Others have expressed concern that people could use them as a payment method and pose a risk to the financial system. Report 2021 for The token issuers are to be regulated as banks and The legislature has been working hard to create guardrails.
The ongoing jousting between US agencies about jurisdiction continues and Attempts by The SEC Some have criticized the agency’s attempts to exert more control. Anxiety over the agency’s efforts is running high after Paxos Trust Co. revealed this week that the agency had told it that was likely to face an enforcement action over its issuance of a stablecoin branded as Binance USD.
Unlike UST that used algorithms and Paxos token issued by Paxos claims to fully back its value, despite trader incentives. by Cash and Other liquid assets
Securities law may allow virtual currencies to fall under the protection of SEC’s remit if Americans buy it to fund a company or project with the expectation of profiting from the efforts of those involved in it. The 1946 decision of the US Supreme Court defining investment contracts is what enables this determination.
The SEC Pressure on co-founders increases KwonIn a different matter, he received the famous anagrammat. SEC Attend an industry conference in New York, 2021 and submit to a subpoena
Kwon’s whereabouts are Currently, this information is not available. South Korean authorities are currently looking for him In connection with a warrant for He was arrested last September for alleged breaches of the capital-markets law. On social media, he has previously denied any wrongdoing.
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