LUNA and MIR are considered securities.
A federal judge ruled that Terraform Labs violated US laws when they bought $LUNA and $MIR as collateral. The SEC trial, scheduled for January 29, 2024, focuses on the collapse of Terra UST's stablecoin and the alleged $25M fraud. Jump trading participation adds complexity; It is Judge Rakoff, not a judge, who determines the SEC's securities status.
In a recent legal development, federal judge Jed Rakoff ruled against the US Securities and Exchange Commission (SEC) Do Kwon and Terraform Labs. The court alleges that Terraform violated US securities laws by selling unregistered securities, specifically the LUNA and MIR tokens.
This decision sets the stage for a trial scheduled to begin on January 29, 2024, which will reveal fraudulent practices and the SEC's involvement.
LUNA and MIR tokens are considered collateral.
In the summary judgment, federal judge Jed Rakoff sided with the SEC in the lawsuit against Do Kwon and Terraform Labs. The ruling affirmed Terraform's failure to register LUNA and MIR tokens as securities and concluded that the company violated US securities laws. This is consistent with the SEC's position that cryptocurrencies, including LUNA and MIR, should be classified as securities under the agency's regulations.
Judge Rakoff's decision limits the SEC's regulatory authority over LUNA and MIR, a major sticking point in the ongoing legal battle. The lawsuit originated in In 2022, Terra's UST stablecoin collapsed and the SEC collected $25 million in a fraudulent security offering.
Skip trading role and SEC status
New evidence presented by Jump Crypto adds complexity to the issue. It is believed to have jumped crypto TerraUSD and is said to have gained $1.28 billion. SEC accuses Terra of lending crypto tokens to US firm Jump, linking the suit to allegations of market manipulation.
In a surprise move, SEC Judge Rakoff offered Terraform unregistered securities and asked them to decide whether to sell them, contesting the jury's decision. The agency argued that the classification of securities was a legal matter for the courts, not a factual question for the jury.
While his civil trial continues, Do Kwon remains in a Montenegrin prison after successfully seeking extradition to the United States to face criminal charges. As the legal saga unfolds, the trial's outcome will have implications for the classification and regulation of cryptocurrencies, specifically LuNA and MIR, in the ever-evolving financial market landscape.
