SEC Investigating Company Behind TerraUSD Stablecoin: Report
The digital currency collapsed in dramatic fashion last month, functionally losing all of its value.
The U.S. Securities and Exchange Commission (SEC) is looking into whether Terraform Labs – the Singapore-registered firm that created the terraUSD (UST) stablecoin and luna (LUNA) token – violated U.S. laws regarding how it marketed the crypto coins, Bloomberg reported Thursday, citing a person familiar with the matter.
Terra and luna functionally lost all of their value last month. Terraform tried relaunching luna, creating a new token and rebranding the original to luna classic (LUNC).
According to Bloomberg, members of the SEC’s Division of Enforcement are investigating whether investor protection rules were broken through Terraform's marketing of the tokens.
The agency was already investigating Terraform founder Do Kwon in connection with his role in building the Mirror Protocol, which allows users to trade tokens representing synthetic stocks.
Terraform Labs did not immediately return CoinDesk's request for comment. Kwon told Bloomberg that he was not aware of any SEC probes into UST and had not heard from the agency.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.