Recently in his conversation, the chief counsel of Delphi Lab said that the recent action of SEC is thorough and well planned.
Has also added that the SEC filing lawsuit against Terra was a thoroughly devised decision and this means other stablecoins can also be targeted.
Most recently, SEC also banned Paxos from issuing stablecoins. The current action taken by the U.S. SEC against Terraform Labs is just the beginning.
Legal action can be taken against all the other major stablecoins as well. Experts said that the allegations and points being raised by SEC officials against Terra were thorough.
Gabriel Shapiro the Chief Counsel of Delphi Labs Analyzed SEC Lawsuit
SEC argued that Terra Labs on purpose coordinated a fraudulent scheme worth billions of dollars.
This involved the manipulation of algorithmic stablecoins and other types of crypto asset securities. Shapiro said that this stance is disturbing for stablecoins.
According to Shapiro’s analysis, all those stablecoin protocols that issue algorithmic stablecoins can be targeted by SEC in the future using a similar stance.
Shapiro also stated that SEC in its plea also argued that Terra Labs’ algorithmic stablecoin, TerraClassicUSD
(USTC) is a security, not a cryptocurrency. SEC further stresses the point that Terralabs circumvented U.S. security laws by initiating its Mirror protocol.
This accusation is similar to Paxos, where SEC claimed that Paxos breached U.S security laws by issuing Binance Stablecoin.
The Mirror protocol is created with the vision to help investors create mAsset- a crypto asset whose price performance is linked with the prices of stocks.
SEC accused Terra used Mirror Protocol Token to replicate the price of the securities to bring sustainability to its assets.
This has been the first lawsuit of its nature, SEC, on the other hand, argued that algorithmic tokens deceive the investors who automatically adjust the prices.
SEC officials said that this security-based swap is a violation of U.S. security law.
Ryan Sean Also Shares the Similar Opinion
Ryan Sean another famous crypto analyst also questioned how SEC can declare these assets as a breach of law. Back in May 2022, Terra-backed tokens price crashed caused by USTC lost its peg to USD.
Terra Luna classic (LUNC) the native stablecoin of Terra Labs that was closely pegged with USD saw a decline in its price by 100% back in 2022.
The crash happened due to Terra’s peg with USD shattered. As the things stand right now, it seems that stablecoins will be hunted down by SEC one after another.
SEC might not stop until all the stablecoin issuers stop issuing the algorithmic stablecoins.
In response to the SEC action, the CEO of Binance said that platform will keep backing the stablecoins trade on its platform.
Previously the CEO of Coinbase, the biggest cryptocurrency exchange in the U.S. said that during the court hearing, he will support both crypto staking and stablecoins.
Experts do believe that now is not the right time to invest in stablecoins. Investors need to wait for the court’s decision.
The Price of Terra Classic USD
As for the price of the coin is concerned over the past week the price of the token was up by 2.47%.
However, today, the price of Terra Classic USD plunged, currently, the token is exchanging hands at $0.0306 per UST.
Moreover, its 24-hours market cap is estimated at around USD 29,941,693. It seems that SEC’s action against Terra is halting its price.
As of this writing, there is high selling pressure on investors. This means that TerraUSD will be highly bearish in the times to come.
Investors have already started to search for other stablecoins to invest in. As Terra faces trouble, Ripple on the other hand performed well against SEC in court.
Ripple seems good investment opportunity for 2023. The reason that stablecoins are an ideal investment opportunity is their low price.