The U.S. Securities and Exchange Commission (SEC) is suing Terraform Labs, the company behind failed stablecoin terraUSD (UST), and its co-founder Do Kwon for fraud and the sale of unregistered securities, among other claims. The SEC alleged that investors were misled about the stability of the algorithmic stablecoin UST, the depegging of which from the U.S. dollar “spelled doom for the entire Terra ecosystem.” The collapse of terraUSD last year sent shockwaves throughout the cryptocurrency industry and was followed by a wave of bankruptcies of prominent firms, and ultimately the meltdown of crypto exchange FTX in November.

DeFi protocol Platypus Finance suffered a flash-loan attack worth over $8.5 million resulting in its stablecoin USP losing its dollar peg and falling to 48 cents. The hacker had exploited a flaw in the USP solvency check mechanism, making Platypus smart contracts think USP was fully backed. “They used a flash loan to exploit a logic error in the USP solvency check mechanism in the contract holding the collateral,” Platypus tweeted. A flash loan is a form of unbacked borrowing used on decentralized finance lending protocols to make quick profits when opportunities arise. Hackers make use of them to destabilize and drain tokens from such protocols.

Bankrupt crypto lender BlockFi is looking to dismiss the bankruptcy case of Emergent Fidelity Technologies, a shell company 90% owned by FTX founder Sam Bankman-Fried. Emergent is the owner of 56 million shares of Robinhood Markets (HOOD) and little else. BlockFi is claiming legal access to the stock, worth nearly $600 million at HOOD’s current price, as security for a loan made in November. By filing for bankruptcy in the U.S., Emergent liquidators are making things more complex, according to BlockFi, describing it as a “futile act,” given that the company has no employees, income or business. The Robinhood shares were seized by the U.S. Department of Justice in January as part of its investigation of fraud against Bankman-Fried.

- Omkar Godbole