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The Terraform Labs case, initiated in February, witnessed a crucial milestone with the issuance of a summary judgment by U.S. Federal Judge Jed Rakoff on December 28th. The judgment classifies Luna, MIR, and other crypto tokens from Terraform Labs as ‘securities,’ shaping the trajectory of the ongoing security violation trial.
Judgment Overview
Judge Rakoff’s order explicitly states, “There is no genuine dispute that UST, LUNA, wLUNA, and MIR are securities because they are investment contracts.” This declaration supports the U.S. Securities and Exchange Commission’s (SEC) stance, setting the stage for potential regulatory implications on the crypto tokens involved.
Trial Continuation
While this judgment is a pivotal development, the legal battle is far from concluded. Both parties’ motions for a summary judgment on fraud charges and other claims have been denied. The trial will proceed, with the jury now tasked with navigating through the complexities of the case.
Trial Ruling Highlights
In addition to the summary judgment, the judge permitted testimonies from witnesses of both parties but excluded two defense witnesses focusing on Terraform’s custodial wallets and the broader crypto economy overview. The ruling aligns with the SEC’s perspective that cryptocurrencies, in general, should be deemed securities, falling under regulatory oversight. However, the court’s decision specifically designates Luna and Mir for SEC supervision.
Recap of Allegations
The SEC filed charges against Terraform Labs and its CEO, Do Kwon, in February, alleging a “multi-billion dollar crypto asset securities fraud.” The accusations revolved around Terraform Labs purportedly orchestrating the fraud through its algorithmic stablecoin Terra USD, which suffered a dramatic collapse. The SEC claimed the company raised billions through unregistered transactions involving a suite of crypto asset securities, including “mAssets” and Terra USD.
Future Trial Date
The focal point now shifts to the impending jury trial on charges of fraud, scheduled for January 24, 2024. This trial date holds the promise of further revelations and insights into the alleged wrongdoings of Terraform Labs and its key figures.