The US court declared LUNA – UST to be a security.
According to the decision of the Southern District Court of New York on December 28 (US time), there was a judgment in favor of the US Securities Commission (SEC) in the lawsuit against Terraform Labs and founder Do Kwon with allegations Illegal securities offering.
Specifically, the court assessed that virtual currencies such as LUNA, UST, wLUNA and MIR in the Terra ecosystem are considered fake securities, and Terraform Labs violated the law when issuing them to US investors without registering with the SEC.
Judge Jed Rakoff of the District Court for the Southern District of New York upheld the SEC’s decision, finding that Terraform Labs and its co-founder Do Kwon offered and sold unregistered securities. Judge Rakoff noted that UST, LUNA, wLUNA and MIR were undoubtedly securities…
— Wu Blockchain (@WuBlockchain) December 29, 2023
However, the court rejected the SEC’s claim that Terraform Labs provided securities trading services related to these currencies.
This is considered a new step in the lawsuit, and the trial of other charges is expected to continue in January 2024.
Previously, in February 2023, the SEC filed a lawsuit against Terraform Labs and Do Kwon related to the collapse of the LUNA-UST currency pair in May 2022, causing more than 60 billion USD in value to disappear from the currency market encode.
The US Securities and Exchange Commission alleges that Do Kwon and Terraform Labs formed a securities fraud scheme, using billions of dollars worth of cryptocurrency to attract hundreds of thousands of investors through the deals offering unregistered securities.
Do Kwon was arrested by Montenegrin authorities in March 2023 and sentenced to 4 months in prison for passport fraud. He is awaiting a decision from a Montenegrin court on his extradition to the US or South Korea, the two countries that have accused him of the collapse of LUNA-UST.
Over the past year, Terraform Labs has tried to place responsibility for the collapse of LUNA-UST on other organizations, but has been unsuccessful.
Related: Victory in Do Kwon’s Extradition Struggle
Chart of LUNA
The price of LUNA tokens is slightly decreasing at the time of writing, however, it is highly likely that it is mainly influenced by fluctuations in the total cryptocurrency market and not so much from the US court’s securities decision.
Chart of the LUNA – UST pair on Tradingview at 2:42 am on December 29, 2023 (UTC)
