Former CFTC Chairman Approves SEC Investigation on Stablecoin Issuer

02/18/2023 22:21 • Daily Digest • 71 views

According to reports, Timothy Massad, former chairman of the United States Commodity Futures Trading Commission (CFTC), said that it was absolutely correct for the United States Securities and Exchange Commission (SEC) to track down the issuer of stable currency Terraform Labs and founder Do Kwon. Massad said, “When you invite people to invest in a token with a promised return of 19% to 20%, this is a security.”

Former Chairman of CFTC: The SEC’s prosecution of Terraform Labs and Do Kwon is “absolutely correct”

Interpretation of the news:

According to recent reports, Timothy Massad, a former chairman of the United States Commodity Futures Trading Commission (CFTC), supports the United States Securities and Exchange Commission (SEC) in investigating securities violations by Terraform Labs, the issuer of the stablecoin, and its founder, Do Kwon. Massad affirmed that when a token has a promised return, it is considered a security, and it is the duty of the SEC to track down such activities.

Massad’s statement resonates with the SEC’s mission to monitor and regulate securities activities and ensure investor protection. The SEC has taken considerable steps in protecting investors from fraudulent activities in the crypto space, and it has been wary of the stablecoin market for a long time. Stablecoins are digital assets that are pegged to a fiat currency, commodity, or other asset, and they have been increasingly popular due to their stability in value, ease of trading, and fast transaction times.

However, their stability is based on the trustworthiness and reliability of the issuer, who is responsible for the assets backing the stablecoin. If the issuer cannot guarantee the backing of the stablecoin, it can cause a significant collapse in the market, resulting in disastrous effects on investors. Therefore, it is pertinent for the SEC to regulate the stablecoin market and ensure that these digital assets comply with securities laws and regulations.

Terraform Labs issued its stablecoin, UST, with a promised return of 19% to 20%, which Massad considers a security offering. The SEC began investigating Terraform Labs in August for securities violations, and it has requested documents and information from the company and its founder, Do Kwon. Massad’s statement is a clear affirmation of the SEC’s position that any token with a promised return should be considered a security and subject to securities laws.

In conclusion, the SEC’s investigation on Terraform Labs and Do Kwon is a step in the right direction towards safeguarding investors’ interests in the crypto space. As the regulatory bodies continue to monitor the market, investors can be confident in the knowledge that fraudulent activities and securities violations will be tracked and dealt with accordingly.

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Former CFTC Chairman Approves SEC Investigation on Stablecoin Issuer

Former Chairman of CFTC: The SEC’s prosecution of Terraform Labs and Do Kwon is “absolutely correct”

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