A recent legal development has seen Federal Judge Jed Rakoff rule in favor of the United States Securities and Exchange Commission (SEC) in its case against Do Kwon Terraform Labs. The ruling was that Terraform Labs had violated U.S. Securities laws by selling unregistered tokens (LUNA and MIR).
This decision has led to a trial, scheduled for January 29th 2024, to look into the SEC’s allegations of fraud and the involvement of Jump Trading. Evidence has been presented by Jump Trading, which adds complexity to the case. The SEC alleges that Terraform Labs fraudulently raised $25 million through the sale of its UST stablecoin in 2022.
Judge Rakoff’s decision confirms the SEC’s stance that cryptocurrencies, including LUNA and MIR, should be classified as securities and be subject to the agency’s regulation. The ruling limits the SEC’s regulatory authority to LUNA and MIR, making it a crucial point in the legal battle.
Do Kwon, who has managed to evade extradition to the U.S. on criminal charges and is currently serving a prison sentence in Montenegro, is facing a civil trial. The outcome of this trial will have major implications on the classification and regulation of cryptocurrencies, particularly LUNA and MIR, in the ever-evolving landscape of financial markets.