- Terraform Labs and its former CEO Do Kwon have filed to dismiss its case against the SEC, arguing that the authority has insufficient evidence
- This is the second attempt the company and its co-founder have made to try and get the case kicked
- The SEC accuses Kwon and Terraform Labs of “orchestrating a multi-billion dollar crypto asset securities fraud”
Terraform Labs and its former CEO Do Kwon have filed to have the case against them thrown out in their battle with the Securities and Exchange Commission (SEC). The filing contends that the SEC has not provided sufficient evidence to demonstrate that Terraform Labs was involved in offering securities. The company has filed a motion for summary judgment, urging Judge Jed Rakoff of the U.S. District Court for the Southern District of New York to conclude that the SEC’s case lacks substantiation for a trial.
SEC Alleges Fraud
The SEC sued Terraform Labs and Kwon in February, accusing the pair of “orchestrating a multi-billion dollar crypto asset securities fraud,” alleging that Kwon hid the truth over the stability of the UST stablecoin given that he knew it had the potential to be volatile. It also alleges that Kwon offered unregistered securities through the platform:
We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.
In a filing yesterday, Terraform Labs and Kwon sought the court’s dismissal of the SEC’s expert opinions, which the company regards as flawed, including the analysis by a Rutgers University professor.
Second Time Lucky?
This is the second attempt that the defendants have made to have the case dismissed, with a prior attempt being rejected by the court; Judge Rakoff acknowledged that the SEC had presented a “plausible claim” that Terraform had indeed offered investment contracts, falling within the SEC’s jurisdiction over securities enforcement. This second attempt, therefore, seems almost doomed from the start.
Kwon is simultaneously contesting the SEC’s request to interrogate him in the US regarding the substantial crash of his company’s tokens. Kwon’s legal team has argued that it is “impossible” to bring him to the US as he is currently detained in Montenegro, where authorities from both South Korea and the United States are seeking his extradition.
