Terraform Labs and its founder, Do Kwon, are in the sights of the United States Securities and Exchange Commission (SEC), which has sparked various reactions from lawyers within the crypto community.\u00a0<\/p>\n
On Feb. 16, the SEC accused and charged Kwon and Terraform Labs for allegedly selling a \u201csuite of crypto asset securities.\u201d While community members are not defending Kwon for his actions, they are questioning the manner in which the SEC is going after Terra and its founder. <\/p>\n
Web3 lawyer Mike Selig posted his thoughts on the issue on Twitter. According to Selig, the SEC characterizes the algorithmic stablecoin TerraUSD Classic (USTC) as a security because it could be exchanged for Terra (LUNA), now known as Luna Classic (LUNC), which is also a security according to the SEC. Selig explained that under this theory, \u201cnearly anything can be a security.\u201d<\/p>\n
Mike Wawszczak, the general counsel for Alliance DAO, also commented on the topic. According to Wawszczak, SEC Chairperson Gary Gensler may want \u201ccomplete discretion\u201d in applying securities laws to any transactions. He tweeted: <\/p>\n
Justin Browder, a partner at the law firm Willkie Farr & Gallagher, likened the SEC\u2019s description of USTC\u2019s use to generate returns on another protocol to \u201cdepositing fiat in a bank.\u201d The lawyer also questioned whether there is another non-security currency that does not behave like that. In the end, Browder described the SEC\u2019s actions as \u201cwild.\u201d\u00a0<\/p>\n
Apart from the lawyers, other members of the crypto community also added to the conversation. Dylan Daniel believes that if everything becomes a security, the SEC will have to expand and scale itself. The Web3 community member hopes that Gensler has a solid plan.<\/p>\n