Take a peek at DCT Coin's crypto performance today, February 21 2024

As previously reported, Terraform Labs and its founder Do Kwon must face fraud charges filed by the US Securities and Exchange Commission (SEC), a federal judge in Manhattan decided on Monday, July 31, 2023.

Kwon and Terraform Labs are behind two cryptocurrencies whose explosion rocked crypto markets around the world last year.

Reporting from Channel News Asia, Thursday (3/8/2023), US District Judge Jed Rakoff rejected their motion to dismiss accusations that they defrauded investors and sold digital assets worth billions of dollars which were unregistered securities.

TerraUSD, an algorithmic stablecoin that is supposed to maintain a 1-to-1 peg against the US dollar, derives its value through another paired token called Luna.

Both tokens lost almost all their value when TerraUSD, also known as UST, slipped below the 1:1 dollar peg in May 2022. Before its collapse, TerraUSD had a market capitalization of more than USD 18.5 billion or the equivalent of IDR 279 trillion (assuming an exchange rate of IDR 15,098 per US dollar) and is the 10th largest cryptocurrency.

According to the SEC complaint, Terraform Labs and Do Kwon misled investors about the stability of UST, and claimed the company's crypto token would increase in value. Regulators can act on the allegations, Rakoff wrote in the decision.

Rakoff also disagreed with the approach other judges took in the recent Ripple Labs case. In the ruling, US District Judge Analisa Torres ruled that Ripple's sale of XRP on a public cryptocurrency exchange was not an offering of securities, in part because buyers did not know whether their funds went to Ripple or a third party.

SEC attorneys in the Terraform Labs case said Torres' ruling was wrongly decided and SEC staff is looking for a way to review it.