The Luna Foundation Guard and Do Kwon, its founder, have faced a fine of up to $4.5B from the SEC. This follows a jury’s verdict that held them accountable for a fraudulent scheme that led to substantial investor losses.
Terra’s ecosystem collapse has had a lasting effect on the wider crypto market, raising concerns about regulation and market stability.
Ki Young Ju, a well-known figure in the crypto community, detailed the sequence of events leading to this fine in a recent X post. He explained that LFG tested the market by selling only a small portion of their Bitcoin holdings, which prompted fears of a broader market crash.
Additionally, Do Kwon halted further sales to avoid triggering such a collapse. However, LFG falsely claimed that the assets were sold to restore the peg, which ultimately led to the SEC’s intervention.
The SEC’s proposed final consent judgment with Judge Jed Rakoff of the U.S. District Court for the Southern District of New York marks a step in holding Terraform Labs and Do Kwon accountable. The fraud complaint, filed in February 2023, came nearly a year after the collapse of Terra’s ecosystem, which sparked a ‘crypto contagion’ that affected numerous other entities.
Securities Lawyer Discusses SEC’s Judgment Approach in Terraform Labs CaseIn another development, the Terra community is moving towards decentralization. According to Terra News Portal, there is an ongoing debate within the community about decentralizing LUNA, similar to Terra Classic.
The community believes that decentralization will strengthen LUNA, with $LUNA, $LUNC, and $USTC taking separate paths but aiming for a common goal. This shift towards decentralization may bring stability and renewed interest in these cryptocurrencies.
Regulatory actions and community efforts illustrate the nature of the industry. At the time of writing, according to data from Coingecko, LUNA trades at $0.4978, with a daily trading volume of $27,504,765.82. This is a 5.80% dip in the last day and 14.50% over the past week.
