The regulator will find out whether the project violated federal investor protection laws

SEC launched investigation into the UST stablecoin collapse

10.06.2022 - 09:25

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2 min

What’s new? The US Securities and Exchange Commission (SEC) has launched an investigation into the collapse of the TerraUSD (UST) stablecoin, which was previously pegged to the dollar. The regulator will check whether the marketing strategy of the stablecoin violated federal investor protection laws, Bloomberg reports, citing an anonymous source.

Bloomberg’s material

What else is known about the investigation? SEC lawyers are also investigating whether Terraform Labs (TFL) violated laws regarding securities and investment products. The digital asset could come under the regulator’s scrutiny if investors bought it to fund the company for profit. The SEC has so far declined to comment on the investigation.

TFL CEO Do Kwon said that the company has no information about the Commission’s investigation into the UST stablecoin. He added:

“We’ve received no such communication from the SEC and are aware of no new investigation outside of that involving Mirror Protocol.”

Earlier, the SEC launched an investigation against Kwon and his company on the fact of trading unregistered securities through the Mirror protocol, created on the Terra blockchain. The regulator explained that users can trade tokenized shares of large US companies through this platform.

Binance crypto exchange also launched its own internal investigation into TFL after a Twitter user under the nickname FatMan accused Do Kwon and the Terra team of manipulating LUNA tokenomics and insider trading.

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