Judge Jed Rakoff, overseeing the SEC's case against former CEO Do Kwon of Terraform Labs, supports the regulatory agency's position. According to the ruling, Kwon and Terraform conducted the sale of uncertified securities related to LUNA and MIR tokens.

The SEC asserted that Terraform engaged in unregistered, security-focused swaps and deceived major investors. Rakoff granted the SEC a preliminary ruling on Count IV of the amended complaint, concerning the unlawful sale of LUNA and MIR, and their unregistered offerings, violating Sections 5(a) and (5c) of the Securities Act.

Rakoff noted that UST, wLUNA, LUNA, and MIR are all considered investment contracts, hence classified as securities. He referred to them as investment contracts that pass the Howey test.

The trial will now address the SEC's allegations against Kwon and Terraform from February 2023 onwards.

Rakoff explained that the defendants tried to argue that UST was not a security because customers knew its value would remain at $1.00. However, since March 2021, UST holders could deposit their tokens in the Anchor Protocol, which, according to Kwon, promised the highest stablecoin yield with a target APR of 20%.

The SEC has requested a judgment from the judge regarding the securities issue to avoid a jury trial.

Jury selection is set to begin on January 24th, with the trial starting on January 29th.

Rakoff emphasized that the allegations regarding the provision and sale of unregistered security-oriented swaps need resolution.

The court rejected the defendants' appeal to disregard two SEC experts and the SEC's appeal to dismiss one expert from the defense. Rakoff agreed to exclude Raj Unny and Dr. Christine Parlour representing the defense.