• The United States Securities and Exchange Commission (SEC) is facing scrutiny for its recent lawsuit against Terraform Labs and its founder, Do Kwon.
• The SEC seeks to punish only the defendants in the Terra case, but plans to pursue legal action against Ripple and anyone associated with the company.
• Ripple recently achieved a minor victory when the SEC admitted that XRP is a software code and not a security, while the SEC’s lawsuit against Terraform Labs and Kwon alleges multi-billion dollar crypto asset securities fraud.
SEC’s Hypocrisy Spotlighted
The United States Securities and Exchange Commission (SEC) is facing criticism from industry observers due to its disparate treatment of cryptocurrency companies. Specifically, court documents suggest that the regulatory body is pursuing harsher punishment for Ripple than it is for Terraform Labs and its founder, Do Kwon.
Different Enforcement Actions
The SEC seeks to punish only the defendants in the Terra case, but plans to pursue legal action against Ripple and anyone associated with the company, including employees, agents, and lawyers. This has led some to question if there is an unfair double-standard being applied by regulators towards different cryptocurrency firms.
Ripple’s Minor Victory
Ripple recently achieved a minor victory when the SEC admitted that XRP is a software code and not a security. The company argues that it should be held to the same standards as Ethereum which was deemed not to be a security in 2018 by former SEC chief Jay Clayton.
Allegations Against Terraform Lab
The complaint filed by the SEC against Terraform Labs and Kwon alleges that they conducted a multi-billion dollar crypto asset securities fraud through unregistered transactions. It also claims that they misled investors about the stability of their stablecoin „Anchor Protocol“ which promised 20% interest on USTC deposits without disclosing any risks involved.
Repercussions For Crypto Industry
The case has far-reaching implications for how cryptocurrencies are regulated in America as it sets an important precedent for future enforcement actions taken by regulators towards digital assets firms. As such, it will be interesting to see how this ongoing legal battle between Ripple & co., versus the SEC unfolds over time.