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In Terra (LUNA) v. SEC, attorneys representing Terraform Labs are fighting the U.S. Securities and Exchange Commission (SEC) after the agency sought billions of dollars in fines. The firm's legal team argues that the token sales occurred “almost entirely outside the United States,” according to a brief filed Wednesday.
The SEC disputed this claim, arguing that Terraform Labs “targeted US investors” and therefore should pay a hefty $5.3 billion penalty, mostly in damages. However, Terraform's lawyers disputed this, stating, “…the SEC has presented no evidence that Defendants' limited activities in the United States directly caused any losses, losses in the United States far below the billions of dollars requested by the SEC.” said.
The SEC had previously charged Terraform Labs and its co-founder Do Kwon over the algorithmic stablecoin Terra USD (UST) in February 2023. This accusation followed the dramatic collapse of the IHR a year ago. Last month, a jury found both Terraform Labs and Kwon guilty of misleading investors and held them liable for civil fraud.
Algorithmic stablecoins like UST use market incentives through algorithms to maintain a stable price. Terra was linked to Luna, a governance token used to stabilize prices. However, the IHR collapsed in May 2022, resulting in a loss of more than $50 billion. The ongoing legal battle between Terraform Labs and the SEC continues as the future of the company and its cryptocurrencies remains uncertain.
*This is not investment advice.