• The SEC is facing criticism for its lawsuit against Terraform Labs, as the punishment they are seeking is less severe than that directed towards Ripple.
• The SEC alleges that Terraform and Kwon conducted a multi-billion dollar crypto asset securities fraud, misleading investors about the stability of their stablecoin.
• Ripple has argued that XRP should be held to the same standards as Ethereum, which the former SEC chief deemed not to be a security in 2018.
SEC’s Hypocrisy Spotlighted
The United States Securities and Exchange Commission (SEC) is under scrutiny for its recent lawsuit against Terraform Labs and its founder, Do Kwon. Court documents suggest that the regulatory body is treating Terra and Kwon with significantly less severity than Ripple, raising questions about the SEC’s inconsistent approach to regulating the cryptocurrency industry.
SEC To Pursue Legal Action
While the SEC seeks to punish only the defendants in the Terra case, it plans to pursue legal action against Ripple and anyone associated with the company, including employees, agents, and lawyers. Ripple has fiercely defended its position that XRP is not a security, and the SEC’s actions are a response to this stance.Ripple recently achieved a minor victory when the SEC admitted that XRP is a software code and not a security. The company argues that it should be held to the same standards as Ethereum, which the former SEC chief deemed not to be a security in 2018.The case has far-reaching implications for future cryptocurrency regulation in US markets.
Multi-Billion Dollar Fraud
In contrast, court documents from the lawsuit against Terraform Labs and Kwon allege that they conducted a multi-billion dollar crypto asset securities fraud. The complaint states that they sold an „inter-connected suite of crypto asset securities“ through unregistered transactions and misled investors about compatibility of their Anchor Protocol with USTC deposits without disclosing risks involved. This serves as part of an attempt by regulators to shape how cryptocurrencies operate within US markets going forward.
Ripple’s Position on Regulation
Ripple’s CEO Brad Garlinghouse spoke on this issue at WEF 2023 summit stating that he believes XRP should be held accountable according to similar regulations applied to Ethereum in 2018 – when it was determined by ex-SEC Chief not classified as security – but applied fairly according all market participants regardless of size or influence across all industry sectors.
It remains unclear what outcome will occur from either case but one thing is certain: these decisions will have long lasting implications on how both companies navigate US regulations moving forward; with questions being raised over potential inconsistencies between perceived punishments given out by regulatory bodies between different market participants or industries alike