The Securities and Exchange Commission (SEC) is already investigating this week’s events concerning Terra LUNA/USD and TerraUSD UST/USD, according to a report from The Block.
What Happened: Two former SEC lawyers told The Block on Wednesday that the SEC is “already on the scene.”
Philip Moustakis, one of the regulator’s former lawyers, said that even if the stablecoin had managed to avoid being subject to federal securities laws thus far, the events that unfolded over the week would grant the SEC enough jurisdiction to investigate.
“Even if there’s a question as to whether UST is a security, even if the stablecoin as designed may have eluded the application of the federal securities laws, the subsequent transactions could drive it back into the purview of the SEC,” said Moustakis.
In September, the SEC served Terra’s founder Do Kwon with papers right before he took the stage at the Messari Mainnet Conference in New York.
“I’m not particularly interested in how U.S. policy shapes around crypto, or particularl,y algorithmic stablecoins. It doesn’t really impact my life,” said Do Kwon in an interview with CoinDesk in December.
On Wednesday, Do Kwon said that the community was discussing a number of potential “remedial measures” that would aid the system to absorb UST’s supply at a faster rate.
8/ More ideas will be discussed in the community forums at https://t.co/EuI3cCQO3e
— Do Kwon (@stablekwon) May 11, 2022
As per data from Benzinga Pro, UST was still trading significantly below its dollar peg at $0.67. LUNA was trading at $0.51, down 96% over 24 hours.