US SEC moves for summary judgment in case against Terraform Labs and Do Kwon US SEC moves for summary judgment in case against Terraform Labs and Do Kwon
The regulator alleges that Terraform and Kwon orchestrated a fraudulent scheme that led to the loss of $45 billion.
2 min read
Updated: Nov. 3, 2023 at 10:59 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The U.S. Securities and Exchange Commission (SEC) wants the court to issue a summary judgment in its case against Terraform Labs and its co-founder, Do Kwon.
In a court filing dated Nov. 2, the SEC contended that the defendants’ violations were abundantly clear and undisputed, obviating the necessity for a full trial.
The SEC accused Kwon and Terraform Labs of defrauding Terra Luna and UST investors, alongside engaging in unregistered public offerings of specific crypto asset securities.
“Terraform and Kwon orchestrated a fraudulent scheme that ultimately led to $45 billion in market loss, including devastating losses for U.S. investors,” the SEC said.
Additionally, the regulator highlighted the irrefutable nature of Kwon’s involvement in Terraform’s transgressions, saying:
“Kwon was a culpable participant in Terraform’s deceptive conduct and misrepresentations. In fact, he was the genesis of that conduct and he repeatedly used Terraform to advance his schemes.”
Adding that:
“No rational jury could conclude that Kwon was not liable for Terraform’s violations of Exchange Act Section 10(b) and Rule 10b-5 thereunder pursuant to Exchange Act Section 20(a).”
Terraform Labs, Kwon moved to dismiss charges
Like the SEC, counsels for Terraform Labs and Kwon have also requested a summary judgment in their favor.
According to the defense, the SEC has failed to prove its case against Terraform Labs. They continued that the financial regulator could not show how the crypto company violated securities or committed fraud.
“But after two years of investigation, the completion of a discovery period that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to proving that the Defendants did anything wrong.”
Meanwhile, the back-and-forth between both parties coincides with an ongoing trial of Terraform Labs co-founder Daniel Shin in South Korea, where he blamed Kwon’s management practices for Terra’s failure.
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems.
Terraform Labs
Terraform Labs is a startup that created Terra, a blockchain protocol and payment platform used for algorithmic stablecoins.
Do Kwon began his professional journey as an engineer, contributing to tech giants Apple and Microsoft.