• The U.S. Securities and Exchange Commission (SEC) recently sued Terraform Labs and Do Kwon, alleging that terraUSD is a security, alongside various other tokens and products.
• This lawsuit comes after the SEC previously denied crypto bank Custodia’s bid for Federal Supervision, which could potentially lead to the SEC classifying stablecoins as securities.
• The lawsuit against Terraform Labs has important implications for the cryptocurrency industry and how regulators view digital assets going forward.

The SEC’s Stablecoin Hammer, Courtesy of Terraform Labs and Do Kwon

Background on the Regulatory Landscape

The Federal Reserve Board recently announced it had again rejected crypto bank Custodia’s bid for Fed supervision, after previously denying the application last month. This could potentially lead to the SEC classifying stablecoins as securities.

The Lawsuit Against Terraform Labs

The U.S. Securities and Exchange Commission (SEC) sued Terraform Labs and Do Kwon last week, alleging the terraUSD stablecoin was a security, alongside various other tokens and products.

Implications of the Lawsuit

The lawsuit has important implications for the cryptocurrency industry and how regulators view digital assets going forward.

What’s Next?

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• The US Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs, the company behind the failed TerraUSD stablecoin, and its co-founder Do Kwon.
• The SEC alleges that Terraform and Kwon misled investors on a number of issues, including who was using TerraUSD for payments, and called both the yield-bearing Anchor Protocol and the LUNA token “crypto asset securities”.
• The SEC is charging Terraform and Kwon with fraud, selling unregistered securities, selling unregistered security-based swaps, and other related claims.

SEC Sues Terraform Labs & Do Kwon

The US Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs, the company behind the failed TerraUSD stablecoin, and its co-founder Do Kwon. The SEC alleges that Terraform and Kwon misled investors on a number of issues, including who was using TerraUSD for payments.

Allegations of Misleading Investors

The SEC claims that both the yield-bearing Anchor Protocol as well as the LUNA token have been labeled as “crypto asset securities” by them. Furthermore, they allege that Terraform & Kwon made misleading statements about how UST’s peg to the dollar was restored after it fell nearly 10 cents in May 2021. As compensation for helping to restore UST’s peg back to $1 USD level at that time, they received LUNA tokens from Terraform.

Charges Brought Against Them

The SEC is charging both entities with fraud; selling unregistered securities; selling unregistered security-based swaps; as well as several other related charges. This marks yet another example of how companies operating within crypto space need to be extra careful when it comes to making public statements or taking certain actions which could be viewed as being misleading or fraudulent by regulators.

Consequences of Collapse

The collapse ofTerraUSD last year led to a wave of bankruptcies in crypto industry due to many users relying heavily on this stablecoin—many of whom were not prepared for such an event happening so suddenly without any warning signs beforehand.

Conclusion

It remains uncertain what will happen next in this case but one thing is clear—investors should be wary when dealing with projects claiming to offer investors any kind of return or profit opportunities with their crypto assets/tokens/coins—as those could very easily fall under the jurisdiction of regulatory bodies like the SEC if found out to violate certain rules/regulations set forth by them.

• Kraken’s settlement with the US SEC led to a market decline, causing $220 million in liquidations on crypto futures trading.
• 90% of liquidated positions originated from traders betting on higher prices.
• Liquidation data serves as a signal of leverage being washed out, providing insight into price volatility.

Crypto Market Decline Spurs $220M in Liquidations

The crypto market recently experienced a significant decline due to Kraken’s settlement with the U.S. Securities and Exchange Commission (SEC). This caused roughly $220 million in liquidations on crypto futures trading, with over 90% of those positions originating from long traders who were betting on even higher prices.

What is Liquidation?

Liquidations occur when an exchange forcefully closes a trader’s leveraged position owing to either a partial or total loss of the trader’s initial margin. This occurs when the trader does not have sufficient funds to keep the trade open and meet the margin requirements for their leveraged position.

How Does Liquidation Affect Price Volatility?

Data regarding liquidations can be beneficial for traders as it serves as an indication of leverage being effectively removed from popular futures products — thereby providing useful insight into short-term price volatility. For example, within the last 24 hours Bitcoin and Ether cumulatively saw over $100 million in liquidations while Dogecoin, Solana, XRP and Aptos each had about $4 million in liquidations apiece.

Biggest Losers: Long Traders

Long trades — or bets on higher prices — took 90% of all liquidated positions during this period and thus bear much of the brunt during these market declines. Binance was hit hardest among counterparties with over $95 million in losses while OKX took second place with around $47 million lost in liquidations.

Kraken Settles With SEC Over Crypto Staking Platform

Kraken agreed to immediately end its crypto staking-as-a-service platform for U.S customers and pay a fine of $30 million to settle Securities and Exchange Commission (SEC) charges that it had been offering unregistered securities through its platform prior to this settlement agreement

• Avraham Eisenberg is a crypto trader and alleged manipulator of Mango Markets who has been accused of draining $116 million from the exchange.
• He is currently in jail and working to negotiate bail, which he waived at his first hearing in U.S. District Court in New York on Thursday.
• Eisenberg is being sued by Mango Labs for $47 million due to the incident, and is charged with three criminal offenses including commodities fraud, commodities manipulation, and wire fraud

Avraham Eisenberg’s Alleged Exploitation of Mango Markets

Avraham Eisenberg has publicly admitted to draining $116 million from the crypto exchange Mango Markets. The 27-year-old crypto trader and alleged manipulator revealed himself to be part of the group that exploited the Solana-based decentralized finance (DeFi) lending protocol for this amount. After pulling off the heist – which Eisenberg described on Twitter as both legal and a “highly profitable trading strategy” – he returned $67 million to preempt any potential civil lawsuit against him by Mango Markets’ decentralized autonomous organization (DAO).

Legal Proceedings Against Avraham Eisenberg

Despite his attempt at reparations, Eisenberg is still being sued by Mango Labs for the remaining $47 million. Additionally, he has been indicted on three criminal offenses including commodities fraud, commodities manipulation, and wire fraud. On Thursday, Jan 2nd 2023, Eisenberg waived bail at his first hearing in U.S. District Court in New York and will stay in jail until at least Feb 14th 2023 while attempting to negotiate bail terms with McMillan LLP Partner Benjamin Bathgate discussing the latest legal developments related to this case..

Eisenberg’s Arrest & Detention

Eisenberg was arrested in Puerto Rico on Dec 26th 2020 and remained there until Wednesday when he was transferred into federal custody for arraignment proceedings before Judge Paul Grewal of U.S District Court Northern District Of California San Francisco Division . He was then sent back into federal detention pending further hearings on his status as an international fugitive from justice who had fled from Israel prior to his arrest..

Impact Of Avraham Eisenberg’s Actions

The actions of Avraham Einsenberg have had a major impact on cryptocurrency exchanges around the world as they consider how best to protect customer funds while also allowing robust trading activity without exposing themselves to such risks again . This case also highlights how regulators are beginning to take a much more active role in enforcing laws related to crypto markets , something investors should keep an eye out for going forward .

Conclusion

The case against Avraham Eisenberg provides insight into how serious allegations of exploitation within cryptocurrency exchanges can lead not only financial losses but also potentially long prison sentences depending upon what can be proven during court proceedings . It remains unclear if or when a settlement may be reached between all parties involved , though it appears that negotiations are ongoing between Mr . Einsenberg’s legal team , prosecutors , and representatives from Mango Labs regarding possible solutions that could bring some closure to this situation .