SEC Scores Another Victory in Terra Case: Why Is This Case Important for the Crypto World?

The U.S. District Court for the Southern District of New York has made a landmark decision in an ongoing lawsuit between the Securities and Exchange Commission (SEC) and Terraform Labs.

Judge Jed Rakoff, in ruling in favor of the SEC, ruled that Terraform Labs offered and sold unregistered securities. However, the court also drew attention by ruling in favor of Terra on some details, including allegations related to the proposal and execution of security-based swap transactions.

Judge Rakoff's decision is based on the Howey Test, one of the cornerstones of securities law. This is considered a good example of how an important issue that is often discussed in the cryptocurrency world is handled legally.

The SEC's lawsuit was based on the claim that Terraform's digital assets were "investment contracts" and therefore securities under the law. The defense's effort to cast aside decades of entrenched Supreme Court and Second Circuit laws has not worked.

Despite Terraform's assertion that UST is not a stand-alone security due to its $1 peg, the court cited the promotional efforts and promises of high returns associated with the Anchor Protocol that influenced the decision.

As we reported Koinfinans.com, the most striking detail of the case is that the decision includes the "Howey Test". However, it's important to note that the lawsuit also intimidates others in the crypto space.

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