Critical SEC Developments for Those 2 Altcoins: Statements Are Here!

The US Securities and Exchange Committee (SEC) announced that Terraform Labs and its founder Do Kwon agreed to pay a fine of over $4.5 billion following the unanimous decision taken by the panel. This decision was recorded as one of the largest fraud penalties in the history of cryptocurrency. On the other hand, there was also an SEC development for Ripple, which is behind the altcoin XRP. Here are the details…

Terraform Labs and Do Kwon accused of fraud

cryptokoin.com As we reported, Terraform Labs founder Do Kwon has been in hot water for a while. The panel found Terraform Labs and Kwon responsible for orchestrating a years-long fraud involving LUNA and UST crypto asset securities. When the fraud scheme was unraveled, it resulted in huge investor losses. The nine-day panel hearing in April revealed that the defendants carried out their scheme by deceptively using the Terraform blockchain and deceiving investors about the stability of the UST.

With the decoupling of UST from the US dollar in May 2022, the price of UST and other Terraform tokens dropped to almost zero. This situation caused investors a loss of approximately 40 billion dollars. The fraud also victimized many individual investors who invested their life savings in Terraform’s ecosystem.

Statement from SEC Chairman Gensler for Terraform

SEC Chairman Gary Gensler said the following in his statement regarding the case:

This case confirms what the court always says: The economic facts of a work, not labels, speculation, or exaggerations, determine whether a work is a security. Terraform and Kwon fraudulent activities have resulted in devastating losses for investors and in some cases destroyed their entire life savings.

Terraform as a segment of the compromise:

• Compensation worth $3,586,875,883
• Precautionary interest in the amount of $466,952,423
• Civil penalty worth $420,000,000

accepted the payment. The company also agreed to cease sales of its crypto asset securities, terminate its operations, fire two of its executives, and distribute its remaining assets to investors and creditors through a liquidation plan, subject to court approval in Terraform’s ongoing bankruptcy case.

There is also SEC development for Ripple Labs, one of the giant altcoin companies

Terraform Labs’ penalty was also echoed in Ripple Labs’ ongoing lawsuit with the SEC. Ripple argued that the $2 billion penalty proposal was disproportionate, citing the Terraform Labs-SEC agreement as an example. Ripple lawyers argued that a fair penalty for the company should be around $10 million.

The final decision in the long-standing SEC-Ripple case is expected to come in July. Ripple CEO Brad Garlinghouse stated that in a negative outcome, XRP could be considered a security in the US and investors would not be able to trade XRP across multiple crypto trading platforms. These developments are considered an important turning point for the cryptocurrency market. Stricter regulations and deterrent measures on fraud and investor protection issues are expected to come to the fore.