Judge’s Ruling: Terraform Labs Violated Securities Law
A federal judge, Jed Rakoff, has ruled that Do Kwon and his company Terraform Labs have violated US securities laws. In a summary judgment, Judge Rakoff found in favor of the Securities and Exchange Commission (SEC), stating that Terraform failed to register its cryptocurrencies, LUNA and MIR, as securities. This ruling means that Terraform illegally sold unregistered securities to the public.
$LUNA and $MIR Tokens Deemed Securities
Judge Rakoff’s ruling aligns with the SEC’s argument that LUNA and MIR should be classified as securities and regulated by the agency. However, the ruling only allows the SEC to regulate these specific tokens, not all cryptocurrencies as they had hoped.
Trial Set to Begin with Involvement of Jump Trading
The upcoming civil trial involving Terraform and Kwon will proceed as scheduled, with new evidence being introduced from Jump Crypto. Judge Rakoff has permitted the submission of confidential discovery material from Jump, which is believed to have manipulated TerraUSD and made significant profits from its activities. The SEC alleges that Terra loaned tokens to Jump in the past, and this could provide further insight into the case.
SEC Argues Court Should Determine Securities Status
In their ongoing legal battle, the SEC has requested that Judge Rakoff determine whether Terraform offered and sold unregistered securities, arguing that this is a legal question for the court, not a factual one for a jury. Despite the legal proceedings, Kwon currently remains in prison in Montenegro after successfully appealing his extradition to the US.
Hot Take: Judge Rules in Favor of SEC in Terraform Labs Case
Judge Rakoff’s ruling in the Terraform Labs case demonstrates the SEC’s continued efforts to regulate the cryptocurrency industry. By deeming LUNA and MIR as securities, the court has affirmed the SEC’s argument. This decision could have far-reaching implications for the future regulation of cryptocurrencies, particularly those involved in fraudulent offerings. As the civil trial unfolds, the involvement of Jump Trading adds a new dimension to the case, potentially shedding light on manipulative practices within the industry. Ultimately, this ruling sends a strong message that companies operating in the crypto space must comply with securities laws to avoid legal repercussions.
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