🫣 The SEC published a press release following the verdict against Terraform Labs and its leader Do Kwon

“The economic substance of a product, not the label, propaganda or hype, determines whether an asset is a security under the law,” said Gary Gensler

The director of the SEC enforcement department in his speech accused the company of manipulating facts and subsequent scam of investors:

“Do Kwon and Terra orchestrated one of the largest securities frauds in US history by, among other things, falsely claiming that they had achieved the Grail of cryptocurrency

As the jury found out, this was a lie, as was their claim about the creation of an “algorithmic stablecoin.”

In the end, all they managed to do was lie to investors, skimp out tens of billions of dollars in market value, and pretend to be victims."

For my part, I would like to note that I do not agree with Gensler’s position regarding the classification of LUNA and UST as securities

My opinion is that I will not call a cryptocurrency a security if it:

1️⃣ Memcoin (according to the Howey test, asset = security if investors' funds are pooled to participate in a common enterprise, and profit depends on its success/failure)

2️⃣ Native token of L1 and L2 networks

3️⃣ Protocol governance token intended for voting and participation in the DAO

4️⃣ And in general, if it is created not only to raise funds to finance the company and nothing more

To sum it up, Gensler and his company will call every cryptocurrency a security if its value goes to zero.

Not to defend Do Kwon, but of course not every algorithmic stablecoin is a scam.

It’s just that in this case, the UST binding was centralized and completely dependent on one LUNA, and given the loss of Do Kwon’s entire fortune, this was unlikely to be in his favor

The same stablecoin DAI is backed by 80% of other stablecoins (in particular USDC), ETH and WBTC, which minimizes risks similar to those with UST (unless the value of USDC falls to zero, but this is unlikely)