SEC Refutes Jury, Seeks Summary Judgement Against Do Kwon and Co.


Regulatory Battle Over Terra and LUNA Tokens Continues

  • The SEC takes legal action against Do Kwon and Terraform Labs, contesting the jury’s leniency.
  • Allegations focus on Kwon’s role in marketing Terra and Terra (LUNA) tokens as securities.
  • Ongoing legal battle with implications for the Terra ecosystem and cryptocurrency industry.

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The SEC has taken action against Do Kwon and Terraform Labs, challenging the verdict reached by the jury. This move by the SEC involves a demand for a summary judgment.

Following the jury’s verdict, the SEC has made it clear that they do not share the jury’s leniency toward Do Kwon. In a court filing dated October 27, the SEC expressed its stance that there is no reasonable basis for the jury’s conclusion. They assert that Kwon should be held liable for Terraform’s violations of Exchange Act Section 10(b) and Rule 10b-5 under Exchange Act Section 20(a).

The SEC’s position is unambiguous: they insist that Kwon is accountable for violations and is challenging the jury’s decision. This legal development adds a significant twist to the ongoing case.

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Allegations and Defense

The SEC has leveled allegations against Do Kwon, primarily focused on his alleged involvement in deceiving cryptocurrency investors. The key accusation revolves around Kwon’s role in marketing Terra and its in-house Terra (LUNA) tokens as securities.

In response to the SEC’s lawsuit, Do Kwon and Terraform Labs have offered their defense. They contend that specific assets, such as Terra Classic (LUNC) and Mirror Protocol (MIR), should not be classified as securities. 

To provide a glimpse of their perspective, Kwon and Terraform Labs have issued a statement. Their defense is a pivotal aspect of this legal battle, with their argument centering on the nature of the assets in question.

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Other Factors and Repercussions

Beyond the legal proceedings, there are other elements to consider regarding the collapse of the Terra ecosystem. Notably, Terra co-founder Daniel Shin’s views on the matter are worth exploring. He attributes the ecosystem’s collapse to the “unreasonable operation of the Anchor Protocol” and external attacks orchestrated by Do-hyung Kwon.

Adding complexity to the situation, the blame for the TerraUSD (UST) stablecoin’s depeg in 2022 has been directed at market maker Citadel Securities. However, Citadel Securities vehemently denies any involvement and deems the allegations as baseless. They point out that these allegations rely on false social media posts and misinformation.

In the midst of these legal and strategic disputes, the cryptocurrency industry watches closely. The ongoing legal developments hold the potential to reshape how cryptocurrencies and blockchain projects are regulated and understood. The implications for the Terra ecosystem and the broader cryptocurrency sector remain uncertain as these disputes unfold.

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