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Terra Luna in court - is the SEC threatening looming?



The relationship between Terraform Labs, CEO Do Kwon and the Security and Exchange Commission is strained. The authority is investigating the company that is responsible for the development of the Terra blockchain. Terra is considered a successful newcomer this year and has a TVL of more than 10 billion US dollars.

The SEC is obviously not bothered by the Terra blockchain, but by the “Mirror Protocol”, which allows its users to trade synthetic assets. Such an asset can, for example, replicate the value of a share and is therefore a practical vehicle for trading classic stock market stocks in a decentralized world.

However, the SEC suspects that Terraform Labs and the company's CEO offered, advertised and circulated these so-called “mAssets” and MIR tokens on the US market, which is of course illegal without prior approval from the SEC . But the CEO, for his part, has a chick to pick with the authorities and filed a lawsuit himself. Because in September he received a summons during a conference in which he sees a violation of the confidentiality requirement and wants to hold the SEC responsible for it.  

XRP as a cautionary example

The disputes have not yet reached the market, as Terra has repeatedly made headlines in relation to the skirmishes between the CEO and the US authorities. LUNA's course has only risen steeply since mid-July and has not been clouded by any reports.

The price of the MIR token has not suffered any damage either, although it has not had nearly the same success as LUNA. But the danger is quite real, because depending on what measures the SEC takes, it could ultimately lead to a situation similar to that already experienced with XRP. The consequence of the legal battle between the SEC and Ripple was the disappearance of XRP from the US market.

That LUNA and MIR would ultimately remain liquid and tradable would certainly be the case. But the course could experience a dangerous kink if the SEC took more drastic measures.

At the moment it remains the case that the SEC initially only wants to obtain the summons or statements and the submission of various documents by Terraform Labs and the company's CEO.  

LUNA course takes off

So far there is cause for concern, but not panic. The exact opposite of panic was the case last week, because the LUNA rate even rose dramatically for a short time. It was decided by vote to burn around 89 million LUNA and thus further reduce the amount in circulation.

The burn process should take a total of two weeks. However, the fact that there is less supply currently cannot bail Terra out. Because LUNA, together with the rest of the market, is in the red.

Since legal disputes usually take time, the biggest threat to Terra and MIR at the moment is likely to be a weak Bitcoin course.  

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