Terraform labs and its stablecoin terrausd (UST) are under scrutiny by the SEC since it lost its peg to the U.S. dollar in early May. The coin lost almost all of its value and also triggered the fall of cryptocurrency terra (LUNA). Both UST and LUNA are created by CEO Do Kwon of Terraform labs. He has since then launched his new project called LUNA 2.0.

As per a Bloomberg report, the SEC is worried about the marketing of UST before it crashed. The federal authority says that Terraform labs had violated investor protection regulations on a federal level. In February, the company was asked to comply with the SEC’s subpoenas. Kwon had later appealed in court but was rejected.

However, the company says it was not aware of any SEC investigation regarding UST. Kwon will not be facing criminal charges in the US, as per some legal advisories.

We are not aware of any SEC probes into Terrausd at this time – we’ve received no such communication from the SEC and are aware of no new investigation outside of that involving Mirror Protocol.

Kwon is originally from South Korea, where the government has ordered an investigation into the recent Terra/LUNA mishap. However, the South Korean branch of Terraform Labs was mysteriously closed down days before the Terra-LUNA disaster.

Terraform Labs, Kwon, and another co-founder face a class-action lawsuit in South Korea. Terraform Labs’ staff are also under investigation for the company’s Bitcoin embezzlement by the Seoul police.


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