U.S. Securities and Exchange Commission are reportedly looking into Terraform Labs and whether or not the algorithmic stablecoin terrausd collapsed. “SEC enforcement attorneys are investigating whether Terraform Labs broke securities and investment product rules.”
SEC Starts Investigation of Terraform Labs & UST
Bloomberg reports that the U.S. SEC is looking into Terraform Labs’ algorithmic stablecoin terrausd, citing sources familiar with the matter.
In May, UST’s peg to USD was lost. The stabilitycoin rapidly lost value, and it collapsed along with cryptocurrency terra (LUNA). Do Kwon from Terraform Labs, the CEO of Terraform Labs created these coins. Since then, LUNA2.0 has been launched.
According to the publication, the SEC is looking into whether the SEC’s investigation of UST’s marketing before its crash violated federal investor protection rules. SEC Enforcement attorneys are looking into whether Terraform Labs violated securities and investment product regulations.
After the collapse of these two currencies, lawmakers from various countries started to examine regulations for stablecoins. Janet Yellen, the U.S. Treasury Secretary, stated that regulation of stablecoins was urgent. Gary Gensler (SEC Chairman) stated later that many of these crypto tokens are likely to fail.
Kwon has already been subject to scrutiny by SEC for the Mirror Protocol. In a ruling Wednesday, Terraform Labs and CEO Kwon were ordered to comply with the SEC’s subpoenas filed in February. Kwon’s appeal has been rejected by the court.
Concerning the SEC probe, Terraform Labs in Singapore told The News that they were unaware of any investigation into UST by the SEC. “We are not aware of any SEC probes into Terrausd at this time – we’ve received no such communication from the SEC and are aware of no new investigation outside of that involving Mirror Protocol,” Kwon said.
Experts in legal matters don’t expect Kwon facing criminal charges in America. They said it’s more likely for him to face civil charges and regulatory penalties.
Kwon’s homeland in South Korea has initiated an investigation into the collapses of Terra and Terrausd. Kwon and Terraform Labs co-founders have been sued in a class action lawsuit. Furthermore, Seoul police are investigating whether Terraform Labs staff embezzled the company’s bitcoin.
Terraform Labs had a South Korean subsidiary. Kwon dismantled it just days before the collapses of UST/LUNA.
Let us know your thoughts about the SEC investigation of the collapse UST. Please comment below.
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