Terraform Labs LUNA and MIR Tokens Classified as Securities, According to Judge’s Ruling

Crypto News- In a significant development on Thursday, a U.S. federal judge ruled that Terraform Labs, the brains behind the beleaguered Terra and Luna cryptocurrencies, violated federal securities laws by peddling their digital assets to the public without the necessary registration. Judge Jed Rakoff, presiding over the U.S. District Court for the Southern District of New York, delivered this verdict through a summary judgment, pinpointing Terraform Labs’ failure to register LUNA and MIR – another digital currency in the Terra ecosystem – as securities.

Terraform Labs LUNA and MIR Tokens Classified as Securities, According to Judge’s Ruling

This ruling paves the way for a potential legal showdown regarding Terraform’s alleged flouting of securities regulations. Despite dismissing attempts from both sides to exclude testimony from rival expert witnesses, the judge greenlit the admission of evidence connected to the trading activity that led to the UST’s depegging in May 2022. It’s worth noting that the court’s decision recognizes the SEC’s oversight only for two cryptocurrencies, Luna and Mir.

The judgment falls in line with the regulatory stance that a multitude of cryptocurrencies should be deemed securities falling within the jurisdiction of the SEC. However, Terraform Labs vehemently disputes this classification. A company spokesperson expressed their disagreement, stating, “We strongly disagree with the decision and do not believe that the UST stablecoin or the other tokens at issue are securities. Further, the SEC’s fraud claims are not supported by evidence, and we will continue to vigorously defend against those meritless allegations at trial,” in an email response to CoinDesk.

The SEC had initiated legal proceedings against Terraform Labs earlier in the year, as part of a broader initiative targeting prominent figures in the cryptocurrency industry. This legal action came in the wake of the widely publicized depegging of Terraform Labs’ algorithmic stablecoin UST, which had a profound impact on the crypto landscape a few months prior. The court’s decision adds another layer of intricacy to the ongoing legal skirmish between Terraform Labs and the SEC, with both parties standing firm in their respective positions.