Terraform Labs and its founder Do Kwon, on the radar of the U.S. Securities and Exchange Commission (SEC), have sparked various reactions from lawyers in the crypto community.
On Feb. 16, the SEC accused Kwon and Terraform Labs of allegedly selling a “set of crypto asset securities.” While members of the community do not defend Kwon for his actions, they question how the SEC is prosecuting Terra and its founder.
Web3 lawyer Mike Selig shared his thoughts on the matter on Twitter. According to Selig, the SEC characterizes the Terra USD (UST) algorithmic stablecoin as a security because it can be exchanged for LUNA, now known as Luna Classic (LUNC), which is also a security under the SEC. Selig explained that, according to this theory, “almost anything can be a security.”
Mike Wawczak, General Counsel of Alliance DAO, also commented on this topic. SEC Chairman Gary Gensler could demand “total discretion” in applying securities laws to any transactions, Wausczak said. He tweeted:
Hm
It’s hard to read the SEC’s complaint against the TFL and not conclude that Chairman Gensler wants free rein in applying securities laws to any deal he wants.
for this work, he asked for $2.2 billion in fiscal year 2023.
(For comparison, San Francisco’s budget last year was $13 billion) https://t.co/BlcWyFgp4H
— Mike Wawczak (@mikedotwaves) February 17, 2023
Justin Browder, a partner at the law firm Willkie Farr & Gallagher, compared the SEC’s description of using UST for profit under another protocol to “depositing fiat in a bank.” The lawyer also wondered if there is another insecure currency that does not behave in a similar way. Ultimately, Browder called the SEC’s actions “wild”.
In addition to lawyers, other members of the crypto community joined the conversation. Dylan Daniel believes that if everything becomes a security, the SEC will have to expand and scale. A member of the Web3 community hopes Gensler has a sound plan.
Terra sues roadmap to attack other stablecoins: Delphi Labs
On February 13, similar sentiments spread across Twitter when the SEC decided to go after Paxos, emphasizing that the BUSD (BUSD) stablecoin is a security. Many members of the community were confused and claimed that stablecoin users were not buying it and were expecting its price to rise.
Credit : cointelegraph.com
