The U.S. Securities and Exchange Commission (SEC) is looking into Terraform Labs – the company behind the terraUST stablecoin and LUNA token.
According to an unidentified source, the SEC is investigating if the firm is in violation of U.S. laws regarding the communication it used to market the coins, Bloomberg reported on Thursday.
Both the coins dramatically fell last month, losing almost their entire value. Several reports indicated retail investors had lost millions of dollars. Terraform rebranded the original token to luna classic and tried relaunching a new luna token; however, the results haven’t been positive yet.
Even though the algorithmic stablecoin was backed by Bitcoin, it wasn’t enough when large investors started mass-selling the tokens, driven by market-wide sell-offs, and both collapsed.
Do Kwon, the founder and CEO of Terraform labs, is already under a trial concerning several acquisitions involving the collapse. Yesterday, the U.S. District Court of Appeals, ordered Do Kwon to comply with an SEC subpoena he sought to avoid over Mirror Protocol. This DeFi tool lets users trade synthetic assets that mirror the price of listed securities.
South Korean officials have also initiated investigations over the crash to determine international price manipulation and other issues.
