There is a stock exchange organization charged A subsidiary of Jump Crypto, Tai Mo Shan Limited, is misleading investors about Terra USD (UST) after the stablecoin lost $1.
The regulator alleges that Ty Mo Shan engaged in trades designed to create the false impression that UST's advertising algorithm was merely maintaining its price. When UST He lost his nail In May 2021, Terraform Labs invited Tai Moshan to buy more than $20 million of UST, meaning that the technical mechanism of the token maintained the $1 mark when Tai Moshan's intervention helped the token recover its level.
The SEC states that Terra's algorithmic approach does not independently maintain UST parity with the dollar, as Terraform pointed out, but depends on tai moshan purchases. The transaction included incentives that allowed Tai Mo Shan to purchase LUNA at a discounted rate after UST was stabilized.
The commission argues that such incentives undercut Terraform's public claims by showing foreign support played a significant role in restoring the $1 price. The order also charges Tai Moshan with distributing LUNA as unregistered securities in the United States, where Tai Moshan is said to have acted as a legal underwriter by receiving tokens from Terraform and quickly selling them on the market.
Ty Mo Shan agreed to pay $73,452,756 in disgorgement, $12,916,153 in prejudgment interest and $36,726,378 in civil penalties for a total of $123 million. The company neither accepts nor denies the findings, but refrains from further violations of registration regulations and fraud.
Collapse of the Terra Luna ecosystem
The Terra Luna ecosystem has been under scrutiny since the 2022 crash that exposed the shortcomings of its stablecoin model and damaged market confidence. The main chain, known as Terra Classic (LUNC), remains much lower in valuation and usage, while a new Terra fork (LUNA) was launched in an attempt to rebuild the network.
Terraform Labs, co-founded by Do Kwon, has faced numerous legal challenges, including an SEC filing accusing Terraform and Kwon of fraud and offering unregistered securities. Company for Chapter 11 bankruptcy In January 2024, the report estimated assets and liabilities between $100 million and $500 million. Leadership changes complicated the project's recovery path, with Chris Amani stepping in as CEO in July 2023 as part of a broader effort to address legal and financial developments.
Market participants have already seen Terraform's reputation suffer due to the UST crash, which has contributed to estimated losses of more than $40 billion in digital assets. Despite introducing a new token and chain, Terra's efforts to regain trust have been hampered by ongoing controversy. One of the founders of Three Arrows Capital claimed that the cryptocurrency group and FTX colluded For the attack on Terra LUNA, it adds to the complex record of the project. Terra Classic is trading at a fraction of its previous value, and the newer Terra token (LUNA) is facing similar downward pressure.
Terraform's legal complications are revealed alongside Do Kwon conviction in Montenegro for traveling with false documents and possible extradition to the United States or South Korea. The environment around Terra has steadily deteriorated since the initial collapse of the UST.
Regulators have expanded their investigation into whether other Terraform-related tokens qualify as securities, and are looking into disclosures about how the assets are offered and promoted. Several tokens associated with Terra have been labeled as securities by the SEC, which will intensify oversight of issuance protocols and secondary market transactions.
