SEC vs Terra Luna and the crypto market
According to Delphi Lab’s general counsel against Terra Luna, the SEC has put up such a tough act that it has raised suspicions in the crypto world.
Terraform Labs and its co-founder Do Kwon are at the center of a court case brought by the US Securities and Exchange Commission itself.
The lawsuit appears to be the battering ram that if it were to produce a ruling in favor of the SEC could be used to target other stablecoins.
Gabriel Shapiro who is the general counsel of Delphi Labs spoke about this on Twitter.
Yesterday, Shapiro told his 33,800 Twitter followers that the complaint against Do Kwon and Terraform Labs (Terra Luna) is a move that seems to serve a plan.
For the company’s general counsel:
“orchestrated a multi-billion dollar cryptocurrency securities fraud involving an algorithmic stablecoin and other cryptocurrency securities.”
According to the Securities and Exchange Commission, Terra Classic USD (USTC) formerly Terra USD (UST) is nothing more than a security:
“[The SEC] will state that the integration, promotion, marketing, trade agreements etc. building stablecoin ecosystems are ‘efforts of others’ that are ‘reasonably expected’ and can lead to profits in relation to the stables.”
The SEC did not only attack the company’s actions as an issuer of a currency that should have been registered with the regulator.
The top US regulator also targeted Mirror, the protocol launched by Terraform Labs as being outlawed.
Through Mirror, Terraform Labs users were able to create mAsset, or a kind of cryptographic basket of assets such as stocks.
The Securities and Exchange Commission, with the Mirror Protocol (MIR), set a precedent that according to Gabriel Shapiro will be used in the future as a case to take as an example for new legal actions.
General Counsel Shapiro also pointed out that for the regulator, LUNA is a receipt, further proof of the merits of the case.
However, the story of customer protection and US regulations when issuing financial products is breaking all over the place.
At Bankless, a podcast on finance and beyond, Ryan Sean Adams, at the microphones explained the same concerns of Delphi Labs’ general counsel.
On Twitter Ryan Sean Adam also has a good following (221,300 followers) and on 16 February he argued his points in a tweet.
Suspicions run rampant on Twitter
According to the commentator, should the SEC emerge victorious then multiple lawsuits with a foregone conclusion would proceed to other stablecoins, thus threatening the entire crypto world.
Meanwhile, the persecuted Do Kwon is not expected to be on the run as widely rumored.
The former top executive of Terra Luna would in fact have taken refuge in the heart of Europe, specifically in Serbia.
South Korea has issued a warrant for Do Kwon’s arrest, a warrant that so far has not borne the hoped-for effects or made any progress in the investigation.
