SEC Launches Investigation Into Terra and USTC Conduct Before May Crash

Updated:

The US Securities and Exchange Commission (SEC) has launched an investigation into the conduct of Terraform Labs and its algorithmic Stablecoin Terra Classic UST (USTC), according to a Bloomberg report on Thursday.

UST lost its dollar peg in early May, which triggered a market-wide meltdown leading to the collapse of Luna Classic (LUNC). Both USTC and LUNC were native to the old Terra blockchain.

The Bloomberg report detailed that the regulatory watchdog is trying to discover if the marketing of USTC before its unfortunate crash breached federal investor protection laws. More specifically, the SEC launched its investigation to ascertain whether Terraform Labs broke securities and investment product rules.

Meanwhile, the collapse of the two cryptocurrencies, which caused tens of billions of dollars in losses, raised several eyebrows globally as various countries looked into regulating Stablecoins. US Treasury Secretary Janet Yellen asserted that Stablecoin regulation is urgent, while SEC Chairman Gary Gensler noted that several crypto tokens would fail if action is not taken swiftly.

Terraform Labs CEO Do kwon

Terra Ordered to Comply with SEC Subpoenas

Terraform Labs CEO Do Kwon previously came under scrutiny over the Mirror Protocol exploit. On Wednesday, a ruling ordered Terraform Labs and Kwon to comply with the SEC subpoenas filed in February.

Commenting on the investigation by the regulator, Terra’s CEO told news outlets that the company was unaware of any SEC investigation. He explained: “We are not aware of any SEC probes into Terrausd at this time – we’ve received no such communication from the SEC and are aware of no new investigation outside of that involving Mirror Protocol.”

Meanwhile, legal experts believe that Kwon will not face any criminal charges in the US. However, they noted that he was more likely to face civil charges and regulatory penalties.

 

You can purchase Lucky Block here. Buy LBlock

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$100 Min Deposit
9.8
  • Award-winning Cryptocurrency trading platform
  • 14 Cryptoassets available to invest in
  • FCA & Cysec regulated
$200 Min Deposit
9.8

Highly volatile unregulated investment products. No EU investor protection.

  • Trade top Cryptos such as Bitcoin, Litecoin and Ethereum plus more
  • Zero commissions and no bank fees on transactions
  • Around the clock service with support in 14 languages
$100 Min Deposit
8.5
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$200 Min Deposit
9
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9
Share with other traders!

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.