A U.S. judge ruled yesterday, Thursday, that Terraform Labs and founder Do Kwon sold unregistered securities in the form of the cryptocurrencies LUNA and UST. This was reported by Reuters.

In doing so, he vindicated the U.S. Securities and Exchange Commission (SEC), which sued Terraform Labs in February of this year for unauthorized securities trading.

The SEC alleges that Kwon and Terraform misappropriated billions of US dollars in customer funds through unauthorized trading of crypto assets, including the algorithmic stablecoin TerraUSD (UST). The SEC accuses Terraform Labs therefore also of fraud.

As a result of the ruling, the fact that the cryptos were unregistered securities would no longer be an issue in the upcoming court case. This remains a hotly debated issue between crypto stakeholders and regulators.

In August ruled a U.S. court in the Ripple case against the SEC that the token XRP was not a security. To many, the ruling was seen as a blueprint for the regulatory future of the industry in the U.S.

However, the head of the U.S. Securities and Exchange Commission, Gary Gensler, has repeatedly publicly warned against fraud and ignoring laws in the crypto sector. In his attempt to regulate the industry according to existing standards, he has so far failed in court. Therefore are now going to vote in the U.S. Senate to fire him.

Meanwhile, Terra founder Do Kwon awaits extradition to the U.S. or South Korea in Montenegro. Montenegrin authorities sentenced him to four months in prison For forging passports.

Under his leadership, the LUNA coin crashed in May 2022, one of the most spectacular crypto collapses ever.