A
U.S.
federal
judge
ruled
on
Thursday
that
Terraform
Labs,
creator
of
the
ill-fated
Terra
and
Luna
cryptocurrencies,
violated
federal
securities
laws
when
it
sold
its
cryptocurrencies
to
the
public.
Judge
Jed
Rakoff
of
the
U.S.
District
Court
for
the
Southern
District
of
New
York
ruled
in
a
summary
judgment
that
Terraform
Labs
failed
to
register
LUNA
and
MIR
–
another
cryptocurrency
in
the
Terra
ecosystem
–
as
securities.
The
summary
judgment
could
shape
an
eventual
trial
over
Terraform’s
securities
violations.
Judge
Rakoff
denied
both
parties’
efforts
to
exclude
testimony
from
opposing
expert
witnesses
who
have
studied
the
trading
activity
that
led
to
UST’s
depegging
in
May
2022.
But
the
judge
blocked
two
other
defense
witnesses,
one
of
whom
would
have
testified
on
activity
in
Terraform’s
custodial
wallets,
and
the
other
who
would
have
given
the
jury
an
overview
of
Terraform’s
crypto
economy.
The
ruling
falls
in
line
with
the
regulators’
assertion
that
most
cryptocurrencies
ought
to
be
classified
as
securities
and
fall
under
the
agency’s
purview.
The
court’s
judgment
only
recognizes
the
SEC’s
right
to
oversee
two
cryptocurrencies,
Luna
and
Mir,
however.
The
SEC
sued
Terraform
Labs
earlier
this
year,
following
a
rash
of
similar
complaints
it
filed
against
several
other
key
players
in
the
cryptocurrency
industry.
The
lawsuit’s
filing
came
just
months
after
the
notorious
depegging
of
Terraform
Labs’
algorithmic
stablecoin
UST,
which
plunged
the
crypto
industry
into
a
deep
winter.