In the most recent hearing, a US judge considers Terraform Labs for violating securities laws
Key Points:
- During a hearing on Thursday, a US judge will consider whether Terraform Lab’s cryptocurrency is security.
- The SEC had previously complained that Terraform Labs and DoKwon had violated securities laws and deceived investors regarding the UST’s stability.
- Kwon and Terraform Labs argue that the case should be dismissed because the SEC does not have jurisdiction over the industry and its digital assets do not meet the definition of security.
US District Judge Jed Rakoff in Manhattan considered whether digital assets created by Terraform Labs (TerraUSD and Luna) are securities at a hearing on Thursday.
Rakoff questioned the legitimacy of Terraform Labs’ so-called Anchor protocol, which promises returns of up to 20% on TerraUSD deposits, during the hearing.
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Do Kwon and Terraform Labs argued that the case should be dismissed because the SEC does not have jurisdiction over the industry and its digital assets do not meet the definition of security.
During the hearing, SEC attorney Devon Staren stated, “We’re not doing anything new here.” We merely adhere to the securities laws.
Close to the furthest limit of the conference, the SEC accentuated that it wasn’t really the actual tokens yet the more extensive biological system of which they were part that helped its examination. Staren of the SEC stated that the regulator did not claim that the assets of Mirror Protocol were securities-based swaps; however, the transactions in which they were involved were.
On or before July 14, Judge Rakoff said he would make a decision on the motion to dismiss.
Two cryptocurrencies that exploded on global crypto markets last year are the brainchild of Kwon and Terraform Labs. They asked US District Judge Jed Rakoff in Manhattan to dismiss an SEC lawsuit that said they sold billions of dollars worth of digital assets as unregistered securities and defrauded investors. Another paired token known as Luna provided TerraUSD, an algorithmic stablecoin that maintains a 1:1 ratio with the US dollar, with its value.
