U.S. Court Sides with SEC in Terraform Labs Case
U.S. Federal Judge Jed Rakoff has issued a decision favoring the Securities and Exchange Commission (SEC) in its legal case against Terraform Labs and its founder, Do Kwon. The ruling substantiates the SEC’s claim that the company had been selling unregistered securities to investors and that Kwon’s statements about potential profits were misleading.
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U.S. Federal Judge Jed Rakoff has issued a decision favoring the Securities and Exchange Commission (SEC) in its legal case against Terraform Labs and its founder, Do Kwon. The ruling substantiates the SEC's claim that the company had been selling unregistered securities to investors and that Kwon's statements about potential profits were misleading.
“There is no genuine dispute that UST, LUNA, wLUNA, and MIR are securities because they are investment contracts,” Jed Rakoff clarified in his ruling.
However, he also noted that the UST stablecoin is not a security by itself, as it was initially designed to retain stable value. The situation shifted with the introduction of the Anchor protocol, backed by Terraform Labs, which promised a certain level of yield to its users.
The next stage of the legal process will involve a jury trial focusing on the fraud charges against Do Kwon and his company. The SEC has successfully resolved the preliminary issue of the tokens' status as securities before the jury trial commences.
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