Delphi Labs Warns Terra Lawsuit Could Have Implications for Stablecoins Beyond UST

The United States Securities and Exchange Commission’s (SEC) lawsuit against Terraform Labs and co-founder Do Kwon could serve as a “roadmap” for the regulator to target other stablecoin issuers, according to lawyer Gabriel Shapiro, the general counsel at investment firm Delphi Labs.

The SEC filed a complaint on February 16 alleging Kwon and Terraform Labs orchestrated a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.

whew lad, lots to digest in the SEC lawsuit vs Do Kwon and Terraform Labs

right off the bat, a very interesting fact is that the SEC is being more thorough than usual–specifically running through the Howey test for various assets (UST, LUNA, and wLUNA) and also alleging that… pic.twitter.com/qHuL6mKpeo

— _gabrielShapir0 (@lex_node) February 16, 2023

Shapiro said the SEC’s arguments were “more thorough than usual”, with the regulator applying the four prongs of the Howey Test to argue that Terraform Labs’ tokens constituted securities under US securities laws.

If the SEC secures a legal victory against Terraform Labs, it would make it easier for the regulator to go after other stablecoin issuers.

TagsCrypto