The SEC argued that the issue at hand is one of law, not fact, and therefore should be heard by the courts.

The U.S. SEC has filed a letter with Judge Jed Rakoff in its ongoing case against Terraform Labs, making the argument that crypto assets should be classified as securities under the legal definition.

The letter, dated Dec. 4, outlines the regulator’s position and suggests that a court, rather than a jury, should determine whether the tokens in this case are securities.

The SEC's letter bolstered its argument by referring to the Howey test, which stems from the 1946 Supreme Court case SEC v. W.J. Howey Co. The regulator said courts have been deciding such questions as part of the law without the need for a jury.

SEC: Terra’s Tokens Are Securities

According to the SEC, the crypto assets offered by the defendants satisfied all aspects of the Howey test, which assesses whether there is an investment of funds in a common enterprise with an expectation of profits derived primarily from the efforts of others.

The committee insisted that there was no significant dispute over the facts for determining the nature of the issuance of crypto assets and therefore considered the issue as a legal question suitable for the court to decide. The letter cited various legal precedents in which the court determined the status of the notes as security, indicating that this approach is consistent with past judicial practice.

In addition, the SEC mentioned that the court had previously granted summary judgment in similar cases, suggesting that such decisions may also apply to this case. If Judge Rakoff grants summary judgment in favor of the SEC, it will lead to the classification of crypto assets as securities.

The SEC’s filing is part of an ongoing effort to address the regulatory status of cryptocurrencies and related assets. As the cryptocurrency market expands, the SEC and other regulators continue to examine how traditional financial market regulations apply to digital assets.

The decision in the Terraform Labs case could impact how other crypto assets are regulated under U.S. law.

Terra files for summary judgment

Earlier this year, the SEC filed a complaint against Terraform Labs PTE Ltd and its CEO Kwon Do-hyung on February 16. The charges were related to orchestrating a multi-billion dollar crypto asset securities fraud involving algorithmic stablecoins and other crypto securities.

Terraform Labs also requested summary judgment in the case from the presiding judge on Dec. 4. The company’s request cited the SEC’s alleged misrepresentations in another case involving DEBT Box, in which Judge Robert Shelby criticized the SEC’s actions.

Terraform's legal team said the situation reflects the SEC's handling of evidence and allegations in its own cases. The DEBT Box case, which involved the SEC's alleged misrepresentations, is seen as a precedent that could affect Terraform's case. #TERRA  #监管