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

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.”

Interpretation of this information:

The former chairman of the United States Commodity Futures Trading Commission, Timothy Massad, weighed in on the recent actions taken by the United States Securities and Exchange Commission (SEC) towards Terraform Labs and its founder, Do Kwon. He stated that the SEC’s decision to track down the issuer of the stable currency was “absolutely correct.” Massad explained that when an individual invites people to invest in a token with a promised return of 19% to 20%, this is considered a security.

The issue at hand revolves around the classification of Terraform Lab’s stable currency. The SEC has classified many cryptocurrencies as securities, and thus subject to regulation. Stablecoins, however, have been a grey area in regards to classification. Stablecoins are digital currencies designed to maintain a stable value by being linked to a reserve asset, such as a national currency or gold.

Terraform Labs’ currency, UST, claims to be pegged to the US dollar, but the SEC is investigating whether this claim is true. Additionally, the SEC is investigating whether UST is a security, and whether or not Terraform Labs has complied with securities laws in its offering of the token.

Massad’s statement supports the idea that the SEC’s investigation and potential regulation of Terraform Labs and UST are necessary in order to protect investors. Promising a return on investment is characteristic of securities, and thus it is important to determine if Terraform Labs’ actions fall under that category.

The three keywords that summarize this message are: Terraform Labs, security, and regulation. Terraform Labs, as the issuer of the stable currency in question, is at the center of the SEC’s investigation. The key issue is whether or not UST is considered a security and therefore subject to regulation. This case highlights the ongoing struggle to classify and regulate cryptocurrencies, and what constitutes a security in the digital space.