SEC Chairperson: The economic substance of a product determines whether it is a security under securities laws

The Securities Exchange Commission (SEC) released an announcement saying that Terraform Labs PTE, Ltd. and Do Kwon agreed to pay more than $4.50 billion in restitution for a multi-year fraud involving crypto-asset securities that resulted in huge losses for investors when the scheme collapsed.
This case confirms what has been reiterated over and over again: the economic substance of a product - not the labeling, publicity or hype - determines whether or not it is a security under the securities laws. Gary Gensler, chairperson of the Securities and Exchange Commission, said. Terraform and Do Kwon's fraud caused devastating losses to investors and sometimes even wiped out entire life savings. Their fraud served as a reminder that investors can be hurt when companies break the law. Terraform and Kwon had tried to resist our investigative efforts - they carried a dispute over an investigative subpoena all the way to the Supreme Court. Fortunately, with this settlement, their victims of mass fraud will now receive some justice.