The US Securities and Exchange Commission (SEC) is reportedly investigating Terraform Labs and the collapse of the terrausd (UST) algorithmic stablecoin. “SEC Attorneys Investigating Whether Terraform Labs Violated Securities and Investment Products Rules.”
SEC launches investigation into Terraform Labs and UST
The US Securities and Exchange Commission is investigating Terraform Labs and its algorithmic stablecoin terrausd (UST), Bloomberg reported Thursday, citing people familiar with the matter.
UST lost its peg to the US dollar in early May. The stablecoin quickly lost its value and collapsed along with the terra (LUNA) cryptocurrency. Both coins were created by Terraform Labs CEO Do Kwon, who has since launched LUNA 2.0.
The SEC is investigating whether UST marketing violated federal investor protection rules prior to its collapse, the publication reports. Specifically, SEC lawyers are investigating whether Terraform Labs violated securities and investment product rules.
The explosion of two cryptocurrencies has prompted legislators in various countries to start regulating stablecoins. In the US, Treasury Secretary Janet Yellen has said regulation of stablecoins is urgent. SEC Chairman Gary Gensler subsequently stated that many crypto tokens would fail.
Kwon is already under scrutiny from the Securities and Exchange Commission over the Mirror Protocol. On Wednesday, Terraform Labs and CEO Kwon were ordered in a ruling to comply with the SEC’s filing in February. Kwon’s appeal was rejected by the court.
Regarding the SEC investigation, Singapore-based Terraform Labs told the news outlet that it had no knowledge of the SEC’s investigation into UST. “At this time, we are not aware of any SEC investigations into Terrausd – we have not received such reports from the SEC and are not aware of any new investigations other than the Mirror Protocol investigation,” Kwon said.
Legal experts do not expect Kwon to face criminal charges in the US.
In South Korea, where Kwon is from, the government has launched an investigation into the collapse of terra and terrausd. A class action lawsuit was also filed against Terraform Labs, Kwon, and another co-founder. In addition, the Seoul police are investigating whether Terraform Labs employees embezzled the company’s bitcoins.
Terraform Labs used to have a subsidiary in South Korea. However, Kwon dissolved it a few days before the collapse of UST and LUNA.
What do you think of the SEC investigating the collapse of the UST? Let us know in the comments below.
Denial of responsibilityA: This article is for informational purposes only. This is not a direct offer or solicitation to buy or sell, nor is it a recommendation or endorsement of any products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is directly or indirectly liable for any damage or loss caused or alleged to be caused by the use of or reliance on any content, goods or services mentioned in this article.
Credit : news.bitcoin.com