Over there SEC has opened an investigation into TerraForm Labsthe company behind cryptocurrencies MOON And TerraUSD The latter is in the crosshairs of authority: a stable currency that in theory should have always been anchored to the value of the dollar, and in practice has collapsed to be worth a few cents.
Stable coins act as a lifeline for cryptocurrency speculators, who know they can convert some of their liquidity into theoretically stable currencies that are not subject to market storms. So it is not a fiat, but a token that replicates the value of the dollar and therefore allows you to protect yourself from market fluctuations while deferring any tax liabilities. TerraUSD is just one of the alternatives, Tethers and USDCs do the same.
The problem? The value of TerraUSD was not backed by dollar reserves, but by algorithms A complex system of automatisms that kept the value from fluctuating: when demand rises, the algorithm produces new coins, and when it falls, it destroys others to avoid loss of value. A sandcastle that was swept away in a short time after some speculators realized they could use this automatic system to their advantage.
Now the SEC wants to straighten it out. At the same time, the US legislator also has the stable currencies in their sights.
Today the stable currency they are not yet regulated, but the SEC may still see responsibility for Terraform Labs’ conduct. For example, it may carefully examine the company’s marketing activities and uncover any deceptive practices. Another issue of great concern to the SEC concerns the management of communications during the emergency: were investors warned in time of the storm that was about to approach? Terraform Labs knew its two currencies – TerraUSD and Luna – were under attack, but did it take the necessary steps to give its investors time to react and protect their savings? Answering these questions could have important implications for the future of the industry.
Source: Lega Nerd
