In a recent ruling by US District Judge Jed Rakoff, the US Securities and Exchange Commission (SEC) emerged victorious in the Terraform Labs case, causing concern and unease within the cryptocurrency community over the classification of stablecoins.This has led legal experts to question the ruling and its implications.
The case centered around Do Kwon, a cryptocurrency entrepreneur, and his company Terraform Labs, who were found to have violated US law by failing to register two digital currencies that eventually collapsed in 2022. The TerraUSD stablecoin and Luna (LUNC) were at the heart of the SEC’s allegations.
Doubts On Stablecoin’s Security Status
Pro-XRP lawyer Jeremy Hogan took to social media, expressing skepticism over the classification of stablecoins as securities.
Jeremy Hogan’s skepticism regarding the classification of stablecoins as securities stems from his questioning of how a stablecoin, which is typically pegged to a specific value such as the US dollar, can be considered a security.
The lawyer raises the point that stablecoins are designed to maintain a stable value and serve as a digital representation of a traditional currency, which may not exhibit the characteristics typically associated with securities.
Hogan pointed to Judge Rakoff’s ruling, which stated that a stablecoin qualifies as a security when it can be staked for a return on investment, irrespective of whether investors stake it or not. Pro-XRP lawyer Hogan stated:
How can a stablecoin be a security? How can you buy something “
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Author: Ronaldo Marquez
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