Feb 18, 2023
SEC Accused of Wild Charges Against Terraform Labs Founder
The United States Securities and Exchange Commission (SEC) has recently set its sights on Do Kwon and his company, Terraform Labs, for allegedly selling a “suite of crypto asset securities.” This move has sparked various reactions from lawyers within the crypto community, who are raising questions about the SEC’s approach.
Mike Selig, a web3 lawyer, posted his thoughts on the matter on Twitter. Selig believes that the SEC is characterizing the algorithmic stablecoin TerraUSD Classic (USTC) as a security because it could be exchanged for Terra (LUNA), now known as Luna Classic (LUNC). He argued that under this theory, “nearly anything can be a security.”
The general counsel for Alliance DAO, Mike Wawszczak, commented on the issue as well. He believes that SEC Chairperson Gary Gensler may want “complete discretion” in applying securities laws to any transactions.
Justin Browder, a partner at the law firm Willkie Farr & Gallagher, likened the SEC’s description of USTC’s use to generate returns on another protocol to “depositing fiat in a bank.” He questioned whether there is another non-security currency that does not behave like that and described the SEC’s actions as “wild.”
Other members of the crypto community have also weighed in on the matter. Dylan Daniel believes that if everything becomes a security, the SEC will have to expand and scale itself. He hopes that Gensler has a solid plan.
The community was similarly confused when the SEC decided to go after Paxos, claiming that the Binance USD (BUSD) stablecoin is a security. Many argued that users of the stablecoin do not purchase it and expect its price to go up.
The SEC’s recent actions have raised many questions within the crypto community about the agency’s approach to regulating web3 assets. With the rise of the NFT market, crypto companies and projects may need to look for new and innovative ways to promote and sell their NFTs. The need for a specialized NFT marketing agency is greater than ever, and Twitter NFT marketing is becoming increasingly popular. Such an agency could help projects create effective and engaging NFT marketing campaigns to reach their desired audiences and increase their chances of success in the NFT market.
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