US SEC Investigating Do Kwon’s Terraform Labs and UST Collapse – According to Bloomberg, the US Securities and Exchange Commission is looking into Terraform Labs and its algorithmic stablecoin terrausd (UST), according to sources familiar with the situation.
In early May, the UST lost its peg to the US dollar. The stablecoin’s value gradually depreciated, and it joined cryptocurrency terra (LUNA) in collapsing. Do Kwon, the CEO of Terraform Labs, created both coins and has subsequently launched LUNA 2.0.
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According to the publication, the SEC is looking into whether the marketing of UST before it plummeted violated federal investor protection regulations. Terraform Labs is being investigated by SEC enforcement attorneys for possible violations of securities and investment product rules.
The collapse of the two cryptocurrencies caused lawmakers in a number of countries to investigate the possibility of regulating stablecoins. Treasury Secretary Janet Yellen stated that stablecoin regulation is crucial in the United States. Following that, SEC Chairman Gary Gensler predicted that many crypto coins would fail.
The SEC is already investigating Kwon for the Mirror Protocol. Terraform Labs and CEO Kwon were compelled to respond with the SEC’s subpoenas issued in February in a ruling issued Wednesday. The appeal of Kwon was rejected by the court.
In response to the SEC investigation, Terraform Labs, based in Singapore, told the news outlet that it was not aware of any SEC investigation into UST. “At this moment, we are not aware of any SEC probes into Terrausd – we’ve gotten no such contact from the SEC and are not aware of any additional investigation outside of the Mirror Protocol investigation,” Kwon said.
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US SEC Investigating Do Kwon’s Terraform Labs and UST Collapse – Kwon is unlikely to face criminal charges in the United States, according to legal experts. According to them, he is more likely to face civil prosecution and regulatory penalties.
The government of South Korea, where Kwon is from, has initiated an investigation into the collapse of terra and terrausd. Terraform Labs, Kwon, and another co-founder have also been named in a class-action lawsuit. In addition, Seoul police are looking into whether Terraform Labs staff stole the company’s bitcoin.
Terraform Labs had a subsidiary in South Korea recently. Kwon, on the other hand, dissolved it just days before UST and LUNA collapsed.