Terraform Labs (Luna) Co-Founder Pleads US Court to Dismiss SEC’s Fraud Allegations

The United States Securities and Exchange Commission (SEC) has filed claims of fraud and securities violations against Terraform Labs. Together with the company’s co-founder, Do Kwon, Terraform Labs is vigorously pursuing a dismissal of these charges from a U.S. District Court. The legal representatives for Kwon and Terraform Labs argued in a document that was submitted on October 27 to the United States District Court for the Southern District of New York that the cryptocurrencies Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and mirrored assets (mAssets) are not securities as asserted by the SEC. The document was filed in response to the SEC’s claim that the cryptocurrencies are securities.

They emphasised that there is a lack of evidence to corroborate many of the SEC’s charges, and this was a major point of emphasis for them. The defence team vigorously refuted a particular claim, which said that Kwon and Terraform Labs had clandestinely moved millions of dollars into bank accounts in Switzerland for the purpose of enriching Kwon personally. The dispute centres on a claim that 10,000 Bitcoin were transferred to an account at a Swiss bank, resulting in the subsequent withdrawal of $100,000 from the financial institution. They emphasised, “The SEC knew this allegation was false when it filed this case,” which gave insight on what was seen as disinformation provided by the SEC.

Constant allegations from the SEC

The action that was brought by the SEC in February posited fraudulent behaviour by Kwon and Terraform Labs. This was a significant setback for the once thriving $40 billion Terra ecosystem, which came to an end in May 2022 when the TerraUSD (UST) stablecoin lost its peg to the United States dollar. The complicated legal situation exacerbated an already large decline for renowned bitcoin companies, with Terraform Labs at the forefront of this trend.

The Securities and Exchange Commission (SEC) said that the catastrophic collapse of TerraUSD (UST) and the Luna cryptocurrency was the consequence of unregistered securities sales that were part of a massive scheme that allegedly defrauded investors out of billions of dollars. This allegation contributes to the continuing legal conflict between crypto businesses and regulatory agencies over the basic principles that govern digital assets.

The Dynamics of the Courtroom

Even after a two-year-long investigation, over 20 depositions, and an exchange of more than two million pages of documents and data, Terraform Labs is adamant that the SEC has not shown sufficient proof to support a trial. This is evidenced by the company’s request for summary judgement, which elucidates the company’s opinion that the SEC has failed to do so. Do Kwon, who is being held in custody in Montenegro at the moment, has pleaded with the court to deny the SEC’s request to extradite him so that he may be questioned in the United States on the catastrophic failure of his company’s tokens.

The attorneys stated that extraditing Kwon for the purpose of obtaining testimony would be “impossible,” while vehemently rejecting any chance that would provide the SEC with a similar advantage. While the legal system is in disarray, Terraform Labs and Kwon continue their ardent defence against the claims made by the SEC. Both parties are working hard to clear their names and recover the reputations that have been severely damaged as a result of the allegations made against them in the cryptocurrency industry.

Image source: Shutterstock


Tagged : / / / / / / / / /

Coinbase CLO Responds to SEC’s Opposition

Paul Grewal, the Chief Legal Officer of Coinbase, took to Twitter on October 4, 2023, to address the U.S. Securities and Exchange Commission’s (SEC) recent filing against the company. The SEC has opposed Coinbase’s motion to dismiss the case against it, a move that Grewal describes as “more of the same old same old.”

In a series of tweets, Grewal criticized the SEC for making “sweeping claims of what the law is/must be without any legal citation.” He pointed out specific pages in the SEC’s opposition brief where these claims were made, such as pages 8, 17-18, and 21.

Grewal emphasized that the assets listed on Coinbase‘s platform are not securities and therefore fall outside the SEC’s jurisdiction. He cited recent court decisions that have clarified this point, stating, “Court decisions over the past several months have made that plain.”

The Chief Legal Officer also took issue with the SEC’s broad interpretation of what constitutes a security. He argued that by the SEC’s logic, “everything from Pokemon cards to stamps to Swiftie bracelets” would also be considered securities. This interpretation, he said, is neither supported by existing law nor reasonable.

Grewal expressed concern over the SEC’s “continued regulation by enforcement approach,” which he believes ignores the voice of the 52-million strong crypto constituency in the U.S. He mentioned that last week, founders from over 40 crypto companies joined the Stand With Crypto campaign in Washington, D.C., to advocate for legislation that “protects consumers, enables innovation, and creates jobs and opportunities in the U.S.”

Coinbase is set to file its reply to the SEC’s opposition on October 24, 2023. Grewal concluded his Twitter thread by stating, “We look forward to filing our reply on Oct 24. As always, we appreciate the court’s consideration of our case.”

Image source: Shutterstock


Tagged : / / / / / / / / /

TikTok Crypto Influencers Mislead Viewers

TikTok, the popular social media platform, has become a go-to source of information for many young people today. However, a recent study conducted by daapGamble reveals that over one-third of cryptocurrency influencers on TikTok are sharing unvetted misinformation about Bitcoin and other cryptocurrency investments. Many of these influencers are promoting crypto investments without properly warning viewers about the risks, convincing unwary investors to put their hard-earned money into cryptocurrencies that are likely to lose value.

The study analyzed 1,161 crypto-related videos on TikTok, which used the hashtag “#cryptok.” More than one in three of these videos were found to be misleading, while just one in ten videos contained some form of disclaimer about the risks of investing. Additionally, 47% of the crypto influencers were found to be pushing services for their own profit.

The potential financial risk for unwary investors is high, with one in three misleading videos on TikTok mentioning Bitcoin. Furthermore, videos using popular crypto-related hashtags, such as #crypto, #cryptoadvice, and #cryptoinvesting, have cumulatively garnered over 6 billion views. However, viewers often overlook the ill intent of influencers and trust their content purely based on its high number of views or likes.

The study found that both new and seasoned investors should do extensive research on crypto projects before making any form of investment. While the reach of crypto influencers is smaller than that of mainstream celebrities, such as Kim Kardashian, Jake Paul, and Soulja Boy, the potential financial risks for unwary investors remains equally high.

In recent years, many mainstream influencers have been accused of promoting cryptocurrencies to their millions of fans without disclosing the payments they received. For instance, the United States Securities and Exchange Commission forced Kim Kardashian to pay $1.26 million in penalties for promoting EthereumMax (EMAX).

In April 2022, a $1 billion lawsuit was filed against crypto exchange Binance, CEO Changpeng Zhao, and three crypto influencers for allegedly promoting unregistered securities. The Moscowitz Law Firm and Boies Schiller Flexner, who filed the lawsuit, called this a classic example of a centralized exchange promoting the sale of an unregistered security.

In conclusion, while TikTok can be an excellent source of information, viewers are advised to exercise caution when it comes to crypto influencers and do their own research before making any investments.


Tagged : / / / / / /

SEC Charges Bittrex for Unregistered Securities Trading

The US Securities and Exchange Commission (SEC) has charged crypto asset trading platform Bittrex and its co-founder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency. In a separate charge, Bittrex Global is also facing charges for its operation of a single shared order book with Bittrex.

The SEC has filed four charges of Exchange Act violations against the companies and Shihara in the US District Court Western District of Washington. According to the SEC’s complaint, tokens traded on Bittrex, including OMG, Dash, Algorand, Monolith, Naga, and IHT, are securities. The agency has been criticized in the past for its “regulation by enforcement” approach, which claims tokens are securities only at the time of filing complaints and not before.

The SEC’s charges against Bittrex highlight the regulatory uncertainty surrounding the crypto industry, especially when it comes to determining whether digital assets qualify as securities. The agency has previously filed charges against several companies for unregistered securities trading, including Telegram and Ripple.

Bittrex is not the first cryptocurrency trading platform to face legal action from the SEC. In 2019, the agency took legal action against EtherDelta, a decentralized exchange, for operating an unregistered securities exchange. The SEC has also previously warned investors about the risks associated with investing in cryptocurrencies and initial coin offerings (ICOs).

Bittrex has been a prominent player in the crypto industry since its launch in 2014. The platform currently supports trading in over 300 cryptocurrencies, making it one of the largest crypto exchanges in the world. However, the SEC’s charges against the company and its former CEO could have significant implications for the broader crypto industry, especially when it comes to determining whether certain digital assets qualify as securities.

In response to the SEC’s charges, Bittrex issued a statement saying that it had been in “close communication” with the agency over the past two years and had been “cooperating with them in an effort to address their concerns.” The company also said that it “disagrees” with the SEC’s assessment that certain tokens traded on its platform are securities and plans to “vigorously defend” itself against the charges.

In conclusion, the SEC’s charges against Bittrex and its former CEO highlight the ongoing regulatory uncertainty surrounding the crypto industry. While the agency has taken legal action against several companies for unregistered securities trading, questions remain about how to determine whether certain digital assets qualify as securities. The outcome of this case could have significant implications for the broader crypto industry and how it is regulated moving forward.


Tagged : / / / / /

BaFin Declines to Classify NFTs as Securities, Recommends Case-by-Case Approach

The fact that there is now a discussion going on over the appropriate approach to classify these digital assets is reflected in BaFin’s decision to not recognize NFTs as securities. This argument has been going on for quite some time. Even if there are many who think of non-fungible tokens (NFTs) as investments or crypto assets, there are also others who believe that NFTs are nothing more than one-of-a-kind digital collectibles that have no value apart from the rarity or desirability of their presence. Despite the fact that some individuals regard non-traded stocks and bonds to be investments, this is the case. It is possible that, at some time in the future, the case-by-case method that BaFin utilizes will make it possible to get greater clarification about the classification of NFTs.

Yet, it is difficult to apply current legal frameworks to non-fiat currencies such as NFTs since these assets are not standardized and cannot be exchanged. This makes it difficult to apply existing legal frameworks. Those in charge of regulation are presented with a challenge as a result of this. The phrase “crypto assets” refers to non-fungible tokens that cannot be traded for other currencies and is an exception to this norm. BaFin is under the impression that non-financial transactions will not be in conformity with the licensing requirements outlined in the Payment Services Supervision Act, nor will they be subject to BaFin’s supervision regarding the prevention of money laundering. This is due to the fact that non-bank financial transactions are not regulated in the same manner that payment services are.

Notwithstanding the difficulties that are associated with recognizing them, non-fungible tokens are becoming an increasingly popular category of digital collectibles. This is despite the fact that identifying them may be difficult. The majority of non-fungible token (NFT) collectors acquire NFTs for reasons related to status, distinctiveness, and aesthetics rather than with the purpose of utilizing them as an investment, according to research that was undertaken by the metaverse site Metajuice. As the market for non-traditional assets (NFTs) continues to increase, the legal frameworks that control it will need to change in order to provide investors and collectors a higher degree of transparency and protection. This will be necessary in order to accommodate the market’s growing size.


Tagged : / / / / / /

Brazil’s Securities Market Regulator Targets Mercado Bitcoin over Token Sale

The Brazilian Securities and Exchange Commission (CVM), the securities market regulator in Brazil, has ordered Mercado Bitcoin, the largest cryptocurrency exchange in Brazil, to provide information on fixed-income tokens the exchange has issued over the last two years.

According to reports by Estadão newspaper, the capital markets regulator wants to know the amount Mercado Bitcoin raised with the tokens and see a list of investors who participated.

While the report did not reveal the names of the tokens, it confirmed that they were issued on a blockchain and allegedly backed by real-world assets. The report further said the tokens were “low risk and high yield” in “consortium, energy, writs of payments and receivables.”

Mercado Bitcoin has responded to the matter, saying that its token sales fully complied with Brazil’s regulatory framework. The exchange further said it “actively” works with the securities market regulator and Brazil’s central bank to “contribute to the construction of regulations for the sector.”

“We do not make public offerings of securities outside the scope of the authorizations we hold as an authorized crowdfunding platform and investment manager,” Mercado said.

In early this month, the CVM banned the Singapore-based crypto exchange Bybit from brokering securities in the country. On September 5, Bybit was booted out of the Brazilian market over its alleged unregistered securities offering. The country’s securities watchdog ordered the Singaporean exchange to cease operations immediately or face a daily fine.

The CVM alleged that Bybit was seeking to raise funds from Brazilian investors for investments in securities without the company having the authorization to act as a securities intermediary. The regulator argued that only Brazil’s stock exchange B3 is allowed to offer securities in the country.

This month, 2TM Group, Mercado Bitcoin’s parent company, criticized Brazilian regulators for not being clear about regulating cryptocurrency. The company said the current environment in Brazil is unfair and has not yet developed a clear regulatory framework for crypto-activities.

Meanwhile, reports indicate that the CVM is preparing to release an official crypto guide soon but encourages companies to consult the commission before issuing any token that may be considered a security.

Image source: Shutterstock


Tagged : / / / / / /

Kraken Has No Plan to Delist Tokens Labeled as Securities by the SEC – Incoming CEO

The incoming CEO of Kraken cryptocurrency exchange, Dave Ripley, announced on Thursday the exchange has no plans to delist tokens the U.S. Securities and Exchange Commission (SEC) has labeled as securities or to register with the agency as a market intermediary.

In July, the SEC started scrutinizing Coinbase for listing several tokens on its platform the regulator identified as securities. As a result, crypto exchanges like Binance delisted some of the tokens that the watchdog recognized as a security in the recent Coinbase insider trading case.

But Ripley has said Kraken has no plans to remove those tokens from its exchange. The executive said Kraken sees no reason to register with the SEC as an exchange because his firm does not offer securities, despite calls from SEC chairman Gary Gensler for crypto platforms to register.

“There are not any tokens out there that are securities that we’re interested in listing. There could be some new token out there that becomes interesting and also happens to simultaneously be a security [and] in that case, we would potentially be interested in that path,” Ripley said.

Despite giant players in the crypto market like Celsius Network and Voyager Digital filing for bankruptcy, and others like Coinbase announcing layoffs, Ripley said Kraken is looking for opportunities for M&A in the current market environment. He said the exchange is open to even considering companies that are going through a bankruptcy process.

He, however, said Kraken would consider acquisitions that boost its product and tech portfolio, particularly as the exchange looks to widen its offerings with an upcoming platform for non-fungible tokens (NFTs) and banking services for institutional clients.

Why Kraken Rebrands as Libertarian?

Kraken has been a champion of libertarian values associated with cryptocurrency. And it seems the new CEO is keen to stay in that course as part of the company’s culture.

In March, Kraken refused to shut down Russian accounts unless regulators order it to do so. During that time, Kraken’s outgoing CEO Jesse Powell said the exchange was within legal sanctions requirements and was working with law enforcement to ensure banned accounts do not unfairly affect innocent Russians. Amid rising financial sanctions against Russia, Kraken refused to freeze of accounts for Russian users.

This week on Wednesday, Kraken announced that its often-controversial CEO Jesse Powell would step down and that Ripley, Kraken’s Chief Operating Officer, will assume the CEO role after the company hires a new COO.

Image source: Shutterstock


Tagged : / / / /

Coinbase Sued For Failing to Grant Wallet Access During Volatility

Coinbase Global Inc, the Nasdaq-listed US digital currency trading platform has been dragged to court yet again in a class action lawsuit.


The lawsuit was filed by George Kattula on behalf of the aggrieved users of the exchange who claimed the firm did not grant them access to their crypto wallets during periods of price volatility.

According to Plaintiff, this is against the advertisement made by the exchange, adding that it “improperly and unreasonably locks out its consumers from accessing their accounts and funds.”


Plaintiff is requesting $5 million in damages as he re-emphasized that the trading platform breached trust by not revealing the assets on its platform are securities. As one of the pioneering trading platforms around, Coinbase saw a tremendous user count within the space of a year. The exchange revealed it has 11.2 million Monthly Transacting Users (MTU) in Q4 last year, a figure that is up from the 2.8 million a year earlier.


Riding on the historic outages from Coinbase following times when market volatility is extreme, the complaint highlights how Coinbase’s growth was not matched by the right number of employees to process the request and this always affects the exchange’s overall performance.


“Coinbase’s user growth has outpaced its ability to provide the account services and protections it promises to consumers,” the complaint says. “Coinbase was aware it was woefully incapable, understaffed, and overstretched, such that it could not perform its promises and obligations to consumers like plaintiff.”


Coinbase is not new to legal scrutiny and has sued and been sued in the past year. The latest designation of 9 tokens on the exchange’s platform as securities by the United States Securities and Exchange Commission (SEC) last month might further put the firm in a more entangled legal brawl in the near future.


Coinbase has come to declare that it does not list securities, however, the current class action lawsuit from George Kattula takes its precedence from this yet-to-be-resolved designation.

Image source: Shutterstock


Tagged : / / / /

Samsung Securities Files Paperwork to Launch A Crypto Exchange

Seven major domestic securities companies in South Korea have filed to launch their own cryptocurrency exchanges in the country. Local newspaper NewsPim reported the new development on Monday.

According to NewsPim, Samsung Securities, Mirae Asset Securities, and five other giant brokerage companies have applied for preliminary approval to operate an exchange within the first-half of 2023.

Mirae Asset Securities Co., Limited is the largest investment bank and stock brokerage company by market capitalization in South Korea, with $648 billion under its management.

As per NewsPim, Mirae has developed a subsidiary under its consultation arm Mirae Consulting to operate the exchange. Mirae is seeking to hire technical staff to research and develop cryptocurrency and other blockchain-based platforms.

Similarly, Samsung Securities is carrying out studies on how best to enter the cryptocurrency ecosystem.

Samsung Securities is a South Korea-based wealth management firm that provides a wide range of financial services from brokerage, wealth management and investment advisory services to corporate finance and trading.

According to NewsPim, Samsung Securities tried to spearhead the development of a crypto trading platform last year, though it failed to acquire the necessary talent to do so.

The report said the sudden influx of institutional interest in South Korea was driven by the newly elected President Yoon Suk-Yeol, who took office in May.

President Yoon promised deregulation of the Bitcoin and crypto markets during his recent presidential election campaign trials.

To assist in accomplishing such goals, the report disclosed that South Korea’s Financial Services Commission (FSC), the South Korean government’s top financial regulator, plans to revise the relevant laws for Bitcoin, cryptocurrencies, and securities.

The regulator intends to push for a Digital Assets Framework Act so that these (Bitcoin, cryptocurrencies, and securities) can be managed in one regulated framework divided into security-type tokens and non-security-type tokens.

According to NewsPim, the FSC will also examine whether domestic virtual assets are securities.

Image source: Shutterstock


Tagged : / / / / / /

Coinbase Facing SEC Probe over Crypto Listing: Sources

Coinbase is facing a new probe as the crypto winter wages on.


Three people familiar with the probe said that the crypto exchange platform is facing a US probe into whether it improperly let Americans trade digital assets that should have been registered as securities.

Bloomberg reported that Coinbase has come under heavy scrutiny from the US Securities and Exchange Commission (SEC) following the platform’s expansion of the number of tokens which is offered to trade.

This case has come at a critical time as Coinbase is still recovering from last week’s allegation of an insider trading scheme where a former company manager and two other people involved were sued by the SEC.

The SEC and Coinbase declined to comment, Bloomberg said.

“As the largest US trading platform, Coinbase lets Americans trade more than 150 tokens. If those products were deemed securities, the firm could need to register as an exchange with the SEC,” Bloomberg reported.

The SEC is necessary to apply for a legal test to check if a digital asset is a security. A token is generally considered to be under the SEC purview if it involves investors kicking in money to fund a company and make a profit.

However, a recent report from Blockchain.News stated that Coinbase’s new derivatives unit is capturing the interest of new retail traders who are eyeing the crypto exchange’s “nano” bitcoin futures products amid the company’s collapsing trading volumes.

Coinbase’s “nano” bitcoin futures product saw volumes touch records three straight days in the last week even after its spot trading volume collapsed from $200 billion in May 2021 to $59 billion in July, the report added.

The nano bitcoin futures product was launched in June. 

Image source: Shutterstock


Tagged : / / / /
Bitcoin (BTC) $ 43,887.76 1.52%
Ethereum (ETH) $ 2,366.69 0.59%
Litecoin (LTC) $ 77.84 4.71%
Bitcoin Cash (BCH) $ 255.00 3.26%