SEC Accuses Tai Mo Shan of Misleading Investors About Terra USD – BitRss

The U.S. Securities and Exchange Commission (SEC) has accused Tai Mo Shan Limited, a subsidiary of Jump Crypto Holdings LLC, of misleading investors regarding the stability of the algorithmic stablecoin Terra USD (UST).

Misleading Investors About Terra USD

The SEC claims that Tai Mo Shan created the impression that the algorithmic mechanism from Terraform Labs was preserving UST’s peg to one dollar. When UST’s value fell below one dollar in May 2021, Tai Mo Shan and Terraform Labs entered into an agreement to stabilize the price.

As part of this agreement, Terraform encouraged Tai Mo Shan to purchase UST by offering discounted LUNA tokens, aiming to restore its stability. On May 19, 2021, Tai Mo Shan executed UST purchases exceeding 20 million dollars, temporarily stabilizing the stablecoin’s price.

Sale of LUNA as Unregistered Securities

The SEC’s findings revealed that Tai Mo Shan acted as a legal guarantor for Terraform Labs and purchased LUNA tokens intending to resell them on U.S.-based platforms.

Between January 2021 and May 2022, Tai Mo Shan offered and sold these tokens as unregistered securities. The SEC classified LUNA as a security and stated that Tai Mo Shan distributed this