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Do Kwon, the CEO of Terraform Labs (LUNA) and a famous crypto influencer, and Terraform Labs are striking back at the U.S. Securities and Exchange Commission (SEC).
Do Kwon (Right), Source: Terraform Labs
There was a rumor of a speaker being served a subpoena during Messari's Mainnet conference in September 2021, and the person was none other than Do Kwon. Below is the tweet from Ryan Selkis, the co-founder of Messari, after the incident.
Source: Ryan Selkis Twitter @twobitidiot
His tweet drew the public's attention at that time but it was unclear who received the subpoena until Do Kwon sued the SEC for the violation of the due process clause of the Fourteenth Amendment. Terra's lawsuit claims that the SEC violated its regulation and hired an outsider to deliver the subpoena at a crowded place to purposely humiliate Do Kwon and the company.
So, why did the SEC serve the subpoena to Do Kwon?
It was because of the Mirror Protocol, a decentralized finance protocol; specifically its issuance of mAssets, synthetic stocks mirroring real-world assets like Tesla, Google, NetFlix, and more. The total value of collateral, liquidity and staked in the MIrror Protocol is now 1.63 Billion UST. (as of October 25th, 2021)
According to the SEC, the fact that mAssets are projecting the real stock prices makes mAssets security tokens and liable to be regulated by the SEC. This brings back the quote from Gary Gensler, the SEC Chair, back in July stating that stock tokens and stablecoins backed by securities might be treated as securities under U.S. law.
Gary Gensler, Source: CNBC
Blockworks sees that "the filing comes amid a series of regulatory actions against the cryptocurrency community in recent weeks".
Some may say that going against the SEC is a losing battle for Terraform Labs and Do Kwon. But no one can tell the future. The price of LUNA, the cryptocurrency of Terra, still seems strong. MCS will be back with more updates.
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