According to two former SEC lawyers, the Securities and Exchange Commission is likely already probing what happened to UST over the last week. A spokesperson for the SEC told The Block: “The SEC does not comment on the existence or nonexistence of a possible investigation.”
The legal status of stablecoins in the US regulatory framework is a hot topic of discussion. On April 21, Kwon himself wrote on Twitter.
Because they are backed by stable assets, stablecoins can be used as a safe haven during times of excessive volatility. TerraForm Labs, unlike other stablecoins, used a distinct mechanism to maintain UST stable. The stablecoin project, in particular, made use of complicated computational processes tied to Terra (LUNA).
LUNA, on the other hand, fell after investors fled after UST was de-pegged. As a result, in the last seven days, the coin has lost 98.49% of its value. The current price of LUNA is 0.8755. Its daily trade volume has likewise dropped by more than half.
Do Kwon’s Recovery plan
Do Kwon, the creator and CEO of Terraform Labs, has broken his Twitter silence to outline the Terra network’s next steps in the wake of the recent market meltdown.
“I understand the last 72 hours have been extremely tough on all of you – know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this,”
Kwon’s immediate goal appears to be to return Terra’s native dollar-pegged stablecoin, UST, over $1. The impact on LUNA, which has dropped nearly 90% in the last 24 hours, is still uncertain. To absorb investors’ attempts to dump the defective stablecoin, Kwon has advocated boosting the supply of LUNA on the market.