Is the SEC’s Terra Lawsuit Trying to Set Precedent That Stablecoins are Securities?

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 18 February 2023

⏱️ 18 minutes

🔗️ Recording | iTunes | RSS

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Summary

In today’s episode, NLW breaks down a slew of late-breaking news, including: Terraform Labs and Do Kwon are being sued by the Securities and Exchange Commission Binance US made strange transfers of $400 million between 2020 and 2021, according to Reuters Judge Kaplan threatens to revoke Sam Bankman-Fried's bail Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW - “The Breakdown” is written, produced and narrated by Nathaniel Whittemore aka NLW, with editing by Michele Musso and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. Music behind our sponsor today is “Foothill Blvd” by Sam Barsh. Image credit: A Mokhtari /Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8. Join the most important conversation in crypto and Web3 at Consensus 2023, happening April 26-28 in Austin, Texas. Come and immerse yourself in all that Web3, crypto, blockchain and the metaverse have to offer. Use code BREAKDOWN to get 15% off your pass. Visit consensus.coindesk.com.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.4	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:15.3	The Breakdown is produced and distributed by CoinDes.
0:20.8	What's going on, guys? It is Friday, February 17th, and today we are talking about the
0:25.6	SEC's lawsuit against Doe Kwan and Tara. Not to mention some very weird transfers from
0:32.6	Binance, but before we get into all that, if you are enjoying the breakdown, please go
0:36.4	subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, if you are enjoying the breakdown, please go subscribe to it,
0:40.6	give it a rating, give it a review, or if you want to dive deeper into the conversation,
0:45.1	come join us on the breakers discord. You can find a link in the show notes or go to bit.ly slash breakdown pot. Good Lord, another Friday and another flurry of activity to end the week.
0:52.0	We have so much to get into, so let's dive right in. On Thursday,
0:55.8	the SEC sued Terraform Labs and its founder, Doe Kwan, for fraud and violations of securities
1:01.1	law. The SEC alleges that Terraform and Kwan misled investors in a range of ways, including
1:05.9	representing that Terra's UST stable coin was being widely used for payments on a Korean platform
1:10.6	called Chai and descriptions of the stability of the UST stablecoin was being widely used for payments on a Korean platform called
1:10.9	Chai, and descriptions of the stability of the UST peg mechanism. The SEC wrote in their complaint,
1:16.4	Terraform and Kwan also misled investors about one of the most important aspects of Terraform's
1:21.2	offering, the stability of UST, the algorithmic quote-unquote stable coin purportedly pegged to the US dollar.
1:27.4	UST's price falling below its $1 peg and not quickly being restored by the the algorithmic, quote-unquote, stable coin purportedly pegged the U.S. dollar.
1:32.1	UST's price falling below its $1 peg, and not quickly being restored by the algorithm,
1:37.1	would spell doom for the entire terraform ecosystem, given that U.S.T. and Luna had no reserves of assets or any other backing.
1:39.2	End quote.
1:40.5	Both the yield-bearing anchor protocol and the Luna token, which underpin the ecosystem,
	...

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