Federal Judge Jed Rakoff has ruled in favor of the US Securities and Exchange Commission (SEC) in the Terraform Labs case, where the platform was accused of offering unregistered securities. In the court statement, Rakoff declared that LUNA, UST, and MIR tokens are indeed securities. The court, however, did not address the charges of fraud. The SEC filed a lawsuit against Terraform Labs and its founder in February, following the collapse of the crypto project, resulting in the loss of approximately $60 billion for the crypto community.
The regulator accused Kwon and his platform of orchestrating a multi-billion dollar fraud related to the development, marketing, and sale of various cryptocurrencies. The judge rejected a motion from both sides to exclude expert testimony, which examined Terra’s trading activities leading to the decoupling of the UST stablecoin from the US dollar. Additionally, Rakoff blocked the testimony of two defense witnesses.
The fraud claims will now be tried by a jury, with the trial set to begin on January 24, 2024. Terraform Labs representatives expressed their strong disagreement with the judge’s decision, asserting that LUNA, UST, and MIR should not be classified as securities. They vowed to continue fighting the SEC in court, maintaining that the accusations of fraud lack evidence.
Meanwhile, Terra founder Do Kwon remains in a Montenegrin prison after being arrested while attempting to flee the country. Local authorities have also accused Kwon of document forgery, although he denies these allegations.
