• The United States Securities and Exchange Commission (SEC) is facing scrutiny for its recent lawsuit against Terraform Labs and its founder, Do Kwon.
• Ripple recently achieved a minor victory when the SEC admitted that XRP is a software code and not a security.
• The SEC’s actions form part of a broader attempt to regulate the rapidly growing and evolving cryptocurrency industry.
Background: SEC Suing Terraform Labs & Kwon
The United States Securities and Exchange Commission (SEC) is facing scrutiny for its recent lawsuit against Terraform Labs and its founder, Do Kwon. Court documents suggest that the regulatory body is treating Terra and Kwon with significantly less severity than Ripple, raising questions about the SEC’s inconsistent approach to regulating the cryptocurrency industry.
The SEC seeks to punish only the defendants in the Terra case, while it plans to pursue legal action against Ripple and anyone associated with the company, including employees, agents, and lawyers.
Ripple’s Response: XRP Not a Security
Ripple has fiercely defended its position that XRP is not a security, and the SEC’s actions are a response to this stance. 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 by former SEC chief in 2018.
The case has far-reaching implications for the future of cryptocurrencies in the US and is seen as legal test of how will regulation by enforcement will shape up in crypto erena.
Allegations Against Terra & Kwon
The SEC’s lawsuit against Terraform Labs and Kwon alleges that they conducted multi-billion dollar crypto asset securities fraud. The complaint asserts that they sold an ‘interconnected suite of crypto asset securities’ through unregistered transactions & misled investors about stability of their stablecoin – Anchor Protocol which promised 20% interest on USTC deposits without disclosing risks involved.
Implications on Crypto Industry Regulation
The actions taken by SEC form part of broader attempt to regulate rapidly growing & evolving cryptocurrency industry . As industry continues to develop regulators will play increasingly significant role in shaping it & setting up regulations through enforcement based systems such as this one initiated by SEC if necessary .
Conclusion
The current lawsuit brought forward bySEC seems hypocritical at best as much harsher punishments are being sought towards Ripple than towardsTerraform labs &Kwon who have allegedly committed multi-billion dollar crypto asset securities fraud while misleading investors about Anchor Protocol’s risk involved thereby calling into question consistency of regulatory body’s policies regarding crypto industry regulations