SEC Investigating $60 Billion Terra Implosion


Alex Dovbnya

The Terra implosion has reportedly been criticized by the US Securities and Exchange Commission

The US Securities and Exchange Commission has reportedly launched an investigation into the Terra implosion Bloomberg

The securities watchdog is trying to determine whether Terraform Labs, the developer of the failed blockchain, has violated federal investor protection rules.

Terraform Labs is not aware of any investigation into Terra’s LUNA cryptocurrency. On Wednesday, Terra co-founder Do Kwon lost an appeal to block the agency’s subpoenas over another ongoing investigation into the Mirror Protocol. Kwon was served by the SEC at a cryptocurrency conference last November. The SEC investigated whether the Mirror Protocol, which allows the issuance of synthetic assets representing shares of large companies, violates securities laws. The controversial founder decided to sue the agency, accusing it of violating its own rules by improperly serving the subpoena. It also argued that the agency’s jurisdiction was limited as Terraform Labs was founded in South Korea.

However, the Court of Appeals for the Second Circuit ruled that the SEC subpoenas are valid. Terraform Labs must therefore cooperate with the regulator.

Several ongoing SEC investigations add to a slew of legal issues facing Terraform Labs and Kwon.

As reported by U.Today, South Korean authorities have also targeted the failed cryptocurrency project. Local police are investigating allegations of embezzlement against an unnamed employee.

Meanwhile, Terraform Labs co-founder Daniel Shin dismissed the mounting allegations of fraud, claiming that the company never intended to scam users.

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