Terra vs SEC lawsuit: U.S. Federal Judge Rules LUNA and MIR Tokens as Securities
In a significant development in the Terraform Labs case, U.S. Federal Judge Jed Rakoff issued a summary judgment on December 28th, classifying Luna, MIR, and other crypto tokens from Terraform Labs as ‘securities.’ This ruling has far-reaching implications for the ongoing security violation trial.
Judgment Overview
Judge Rakoff’s order unequivocally states that UST, LUNA, wLUNA, and MIR are deemed securities because they represent investment contracts. This decision aligns with the U.S. Securities and Exchange Commission’s position, potentially impacting the regulation of the involved crypto tokens.
Trial Continuation
While this judgment is a significant milestone, it does not mark the end of the legal battle. Both parties’ motions for a summary judgment on fraud charges and other claims have been denied. The trial will proceed, and the jury will now delve into the complexities of the case.
Trial Ruling Highlights
In addition to the summary judgment, the judge allowed testimonies from witnesses on both sides, although two defense witnesses focusing on Terraform’s custodial wallets and the broader crypto economy overview were excluded. The court’s decision reflects the SEC’s viewpoint that cryptocurrencies, in general, should be considered securities and fall under regulatory oversight. However, Luna and Mir specifically are designated for SEC supervision.
Recap of Allegations
In February, the SEC filed charges against Terraform Labs and its CEO, Do Kwon, accusing them of a “multi-billion dollar crypto asset securities fraud.” The allegations centered around Terraform Labs orchestrating the fraud through its algorithmic stablecoin Terra USD, which experienced a significant collapse. The SEC claimed that the company raised billions through unregistered transactions involving various crypto asset securities, including “mAssets” and Terra USD.
Future Trial Date
The focus now shifts to the upcoming jury trial on fraud charges, scheduled for January 24, 2024. This trial presents the potential for further revelations and insights into the alleged misconduct of Terraform Labs and its key individuals.