Terraform Labs and its founder Do Kwon being in the sights of the United States Securities and Exchange Commission (SEC) have sparked various reactions from lawyers within the crypto community. 

On Feb. 16, the SEC accused and charged Kwon and Terraform Labs for allegedly selling a “suite of crypto asset securities.” While community members are not defending Kwon for his actions, they are questioning the manner in which the SEC is going after Terra and its founder.

Web3 lawyer Mike Selig posted his thoughts on the issue on Twitter. According to Selig, the SEC characterizes the algorithmic stablecoin Terra USD (UST) as a security because it could be exchanged for LUNA, now known as Luna Classic (LUNC), which is also a security according to the SEC. Selig explained that under this theory, “nearly anything can be a security.”

Justin Browder, a partner at the law firm Willkie Farr & Gallagher, likened the SEC’s description of UST’s use to generate returns on another protocol to “depositing fiat in a bank.” The lawyer also questioned whether there is another non-security currency that does not behave like that. In the end, Browder described the SEC’s actions as “wild.” 

(By EZRA REGUERRA)

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