SEC Wins Ruling Against Do Kwon Over Mirror Protocol

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  • Do Kwon has lost his appeal against the SEC’s investigation of Mirror Protocol
  • Mirror Protocol is accused of selling unlicensed securities to US citizens
  • Kwon now has to deal with that as well as the Terra fallout

If the cases building against Terra founder Do Kwon with regard to the Terra USD and LUNA collapse weren’t bad enough, the Korean now faces scrutiny over Mirror Protocol after the Securities and Exchange Commission (SEC) won a ruling that forced him to comply with their investigation into the DeFi project built on the Terra blockchain. Mirror Protocol was exploited in May for $2 million following the collapse of LUNA, and Kwon must now assist in the case that accuses the protocol of selling unlicensed securities.

SEC Started Investigating Mirror Protocol in May 2021

Mirror Protocol had a chequered past even before the exploit this year, with developers recently discovering a $90 million hack that took place in October 2021 but that had gone unnoticed.

Five months before the hack the SEC had begun looking into whether Mirror Protocol was selling securities to US citizens without a licence, contacting Kwon over their concerns but receiving no response. The SEC then served Kwon with a legal summons during the Messari Mainnet conference.

Kwon Lost Jurisdiction Appeal

Kwon opposed the summons, saying the SEC did not have jurisdiction over him or Mirror Protocol. A ruling in February shot down Kwon’s claims, and his appeal was heard, and dismissed, this week.

This means that Kwon now has no choice but to comply with the SEC’s investigations of Mirror Protocol, right at a time when he is trying to both get the recently-collapsed Terra back off the ground and deal with the legal fallout from that.

It never rains but it pours…especially when you’ve spent the last year seeding the clouds.