The United States Securities and Exchange Commission (SEC) is challenging the verdict reached by the jury in the case against Terraform Labs. The SEC is requesting a summary judgment on all claims related to the alleged violations committed by Do Kwon, the co-founder of Terraform Labs. The court filing on October 27, directed to the U.S. district court – Southern District of New York, emphasized the SEC’s disagreement with the jury’s leniency towards Kwon’s involvement in facilitating the fraudulent activities that led to the collapse of Terraform Labs.
According to the SEC, there is substantial evidence that demonstrates Kwon’s participation in deceiving cryptocurrency investors by creating and promoting Terra and its native tokens, LUNA. The SEC argues that these tokens should be considered securities, contrary to Kwon’s claims. The SEC’s demand for a summary judgment implies that they firmly believe Kwon is accountable for the violations of Exchange Act Section 10(b) and Rule 10b-5 thereunder pursuant to Exchange Act Section 20(a).
In response to the SEC’s lawsuit, Do Kwon and Terraform Labs have filed a request to dismiss the SEC’s claims. They argue that the tokens in question, including Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and its mirrored assets (mAssets), do not meet the criteria to be classified as securities. However, the SEC maintains its position, asserting that Kwon and Terraform Labs engaged in unregistered transactions, sold securities, transacted with mAssets, and committed fraud.
Meanwhile, in another development related to the Terra ecosystem collapse, Daniel Shin, co-founder of Terra, has attributed the collapse to the “unreasonable operation of the Anchor Protocol and external attacks carried out by Do-hyung Kwon.” However, Terra recently blamed market maker Citadel Securities for an alleged deliberate attempt to cause the depeg of its stablecoin, TerraUSD (UST), in 2022. To support their claim, Terraform Labs has filed a motion compelling Citadel Securities to provide additional documentation as evidence.
Citadel Securities has issued a statement denying any involvement in the matter and dismissing the motion as baseless. The company has argued that the motion relies on false social media posts and overlooks the information they have already provided, which confirms their lack of involvement.
Overall, the SEC’s rejection of the jury’s verdict and their demand for a summary judgment indicate the agency’s strong belief in the liability of Do Kwon and Terraform Labs for the alleged violations. The case continues to be a focal point in the cryptocurrency industry, highlighting the challenges faced by regulators in defining the legal status of digital assets.
Source link