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Former CFTC Chairman Supports SEC’s Investigation of Stablecoin Issuer

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According to reports, Timothy Massad, former chairman of the United States Commodity Futures Trading Commission (CFTC), said that it was absolutely correct for…

Former CFTC Chairman Supports SECs Investigation of Stablecoin Issuer

According to reports, Timothy Massad, former chairman of the United States Commodity Futures Trading Commission (CFTC), said that it was absolutely correct for the United States Securities and Exchange Commission (SEC) to track down the issuer of stable currency Terraform Labs and founder Do Kwon. Massad said, “When you invite people to invest in a token with a promised return of 19% to 20%, this is a security.”

Former Chairman of CFTC: The SEC’s prosecution of Terraform Labs and Do Kwon is “absolutely correct”

Interpretation of the news:


The former chairman of the United States Commodity Futures Trading Commission (CFTC), Timothy Massad, has voiced his support for the United States Securities and Exchange Commission (SEC) in its investigation of Terraform Labs, the issuer of stablecoin. Massad believes that the SEC is right to track down the company’s founder, Do Kwon, after he invited people to invest in a token that promised a return of 19-20% per annum.

Massad’s unequivocal stance is grounded in the fact that the Securities Act of 1933 defines a security as “any note, stock, treasury stock, security future, security-based swap or investment contract.” Investment contracts are considered securities if they meet specific criteria. These criteria include offering an opportunity for investors to raise their expectations of profits from the enterprise of others, and at the same time being dependent upon those others’ entrepreneurial or managerial efforts.

The existing regulatory framework does not draw a clear line between digital assets, including cryptocurrencies, and traditional financial instruments. This lack of clarity has given rise to several schemes that operate under the guise of tokens and cryptocurrencies, but that are being used as investment instruments.

Stablecoins, designed to maintain their value vis-a-vis another asset, have become increasingly popular due to their relative stability compared to volatile cryptocurrencies like Bitcoin. This popularity, however, has made stablecoins an attractive target for bad actors seeking to exploit regulatory loopholes for personal gains.

Massad’s stand on the Terraform Labs case shows that regulators must do more to ensure that companies launching initial coin offerings (ICO) comply with the existing securities laws, even if they describe their products as “alternative assets.” As the popularity of cryptocurrencies and digital assets continues to grow, regulatory oversight must evolve to encompass these new financial instruments.

In conclusion, Massad’s support for the SEC’s investigation of the Terraform Labs founder is a welcome development in the cryptocurrency and digital asset industry. Regulators must continue to work in concert to keep bad actors in check and ensure investors are protected from fraudulent schemes.

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