U.S. District Judge Jed Rakoff in the latest decision ruled that <a href="https://news.todayq.com/do-kwon-extradition-ruling-overturned/" target="_blank" rel="noreferrer noopener">fallen crypto tycoon</a> Do Kwon and his company Terraform Labs breached the law by failing to register two digital currencies that collapsed in 2022. The Securities and Exchange Commission (SEC) brought the case following the downfall of TerraUSD and Luna currencies. Judge sided with US SEC 
According to reports, Judge Rakoff denied summary judgment to both parties on the SEC’s fraud claims. This will allow them to proceed to a trial scheduled for January 29, 2024. However, he dismissed SEC claims alleging illegal offerings of security-based swaps. 
Terraform Labs expressed strong disagreement with the decision. It asserted that it does not believe its tokens were securities. The company vowed to continue defending against what it deemed the SEC’s “meritless” fraud claims during the trial. 
The case revolves around TerraUSD, a stablecoin designed to maintain a constant $1 price, and Luna, a more traditional token linked closely to TerraUSD. Both cryptocurrencies suffered significant losses, estimated at $40 billion or more, when TerraUSD failed to maintain its $1 peg in May 2022. Luna to keep fighting? 
The SEC argued that TerraUSD and Luna, among other assets, were unregistered securities, qualifying as “investment contracts.” The regulator also accused Terraform and Kwon of repeatedly misleading investors about the stability of TerraUSD, including false claims about the cryptocurrencies’ potential value increase. 
Judge Rakoff’s ruling stated that there was “no genuine dispute” that the four crypto assets, including TerraUSD and Luna, qualified as securities under the 1946 U.S. Supreme Court decision in SEC v WJ Howey Co, defining investment contracts. However, he acknowledged that reasonable jurors could disagree on whether the defendants intended to defraud investors based on various statements. 
The final resolution of the case will determine the SEC’s remedies for the sale of unregistered securities once the defendants’ liability on fraud claims is determined. This legal battle highlights the ongoing debate within the cryptocurrency industry about whether tokens should be considered securities, with potential implications for the broader regulatory landscape. 
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US SEC claims victory in Do Kwon, TerraUSD Securities case

Todayq News

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