A lawyer, Gabriel Shapiro, has suggested that the United States Securities and Exchange Commission’s (SEC) lawsuit against Terraform Labs and its co-founder, Do Kwon, could be used as a roadmap for the regulator to go after other stablecoin issuers in the future.
Shapiro explained that the SEC’s arguments in the lawsuit were “more thorough than usual” and that the regulator may use the case to sue other stablecoin issuers.
The SEC alleges that Terraform Labs and Kwon “orchestrated a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
The lawsuit argues that Terra’s algorithmic stablecoin, TerraClassicUSD (USTC), Terra Luna Classic (LUNC), and Wrapped LUNA (wLUNA) all constitute securities under US securities laws.
The SEC also claimed that Terraform Labs breached US securities laws by launching the Mirror Protocol, which allowed users to create a crypto version of an asset that “mirrors” the price behavior of other assets such as stocks.