US authorities are suing Terra and Do Kwon

The US Securities and Exchange Commission (SEC) has embarked on a crusade of sorts. Suddenly everything is an unregistered securities contract. Terraform Labs and its founder Do Kwon are the latest victims of the SEC.

SEC is suing Terra

Companies that issue securities (such as stocks) must report this to the SEC prior to issuance so that the SEC can prevent the company from selling fraudulent assets to unsuspecting investors.

However, Terraform Labs, the company behind the Terra (LUNA) ecosystem, has not done this. That’s why the SEC is one lawsuit started against the company and its co-founder and former CEO Do Kwon. The company should have listed the Terra token (LUNA) and its USD stablecoin UST as securities. In addition, it violated anti-fraud measures when selling these alleged securities.

The SEC wants to go to court to fine the company and Do Kwon and want investors to be compensated. The policymaker also wants Do Kwon to be banned from ever buying, selling and issuing ‘crypto asset securities’ (read: cryptocurrencies that are securities in the eyes of the SEC).

Meanwhile, Do Kwon has still disappeared without a trace. He is expected to be in Serbia, having fled there to avoid being extradited to the South Korean police.

SEC is increasingly successful

Of course, the court has yet to decide whether the SEC is right. So it is not yet certain that Terra (LUNA) and UST are indeed securities. However, the SEC seems to be slowly gaining an increasingly better position, while the crypto industry was convinced a while ago that the SEC no longer had a leg to stand on.

For instance, the SEC recently sued Kraken because it found Kraken was offering crypto staking as unregistered securities. This lawsuit has won the policy maker. Furthermore, the SEC got Binance and Paxos to stop issuing BUSD. Binance’s own token BNB is also being investigated by the SEC. Even the case against LBRY has narrowly escaped the worst case scenario – still not very positive.

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