More than 2,000 people who invested money in the so-called "algorithmic stable coin" TerraUSD have come together in a class-action lawsuit against the company.
The lawsuit was filed in the Northern District of California. The platform's false advertising was accused of violating US securities laws. The suit states that ads for UST were running in April. UST was described in a video ad as "fiat-backed" when it wasn't.
The lawsuit states that investors were wiped out when they learned that UST was not a stable asset. The document says that since the collapse of UST, the ads for UST have been removed.
The head lawyer for the firm leading the class-action case made a call for investors to contact them back in May.
UST and Luna aren't registered with the SEC. The lawsuit says that both are securities. If that definition holds up in court, it means that Binance has been trading illegal securities.
There was a previous federal lawsuit that was dismissed. Two U.S. senators introduced a bill last week that would define cryptocurrencies as a commodity.
Last week, the SEC launched a probe over the launch of the eponymous coin. The token wasn't registered with the SEC when it was first offered. The company did not respond to the request for comment.
One Terra was never meant to be below a $1 value, but it was supported by an algorithm and not actual U.S. money. UST was linked with a sister coin called Luna, which was the fourth most popular coin at the time. It was supposed to balance things out when the sister coins' value fell.
The system fell apart when Terra was de-pegged from the U.S. dollar. People lost a lot of money. Some people claimed to have lost their entire life savings due to the coin collapse. The investor went so far as to show up at the house.
The UST and Luna were de listed on May 12. The original Terra and Luna were worth less than Kwon and the Luna Foundation Guard tried to save them from. The new version of the currency, Luna/Terra 2.0, was launched by them.
The organization responsible for the specific token is not the focus of the new lawsuit. The suit would have a far-reaching impact on the world of digital currency.
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