In a recent court filing on October 27, the United States Securities and Exchange Commission (SEC) expressed its disagreement with the jury’s conclusion regarding Terraform Labs’ alleged violations. The SEC has demanded a summary judgment, challenging the jury’s leniency towards Do Kwon and his involvement in the fraudulent activities that led to the collapse of the Terra ecosystem. The court filing, submitted to the U.S. District Court for the Southern District of New York, emphasized that “No rational jury could conclude that Kwon was not liable for Terraform’s violations.”
The SEC’s evidence of violations points to Do Kwon’s role in misleading crypto investors by creating and promoting Terra and its in-house Terra (LUNA) tokens as securities. The regulatory body argues that Kwon and Terraform Labs offered and sold securities, conducted unregistered transactions involving LUNA and Mirror Protocol (MIR), engaged in transactions with mAssets, and committed fraud. The SEC firmly maintains that Kwon should be held accountable for these actions.
Response from Do Kwon and Terraform Labs
In response to the SEC’s allegations, Do Kwon and Terraform Labs requested the judge to dismiss the SEC’s lawsuit. They argued that Terra Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR), and its mirrored assets (mAssets) are not securities as claimed by the SEC. They sought to refute the SEC’s accusations by questioning the classification of these assets and the need for them to be registered as securities.
Blame Game: Terra Ecosystem Collapse
While Terra co-founder Daniel Shin’s lawyer attributed the collapse of the Terra ecosystem to the “unreasonable operation of the Anchor Protocol and external attacks carried out by Do-hyung Kwon,” the company recently placed blame on market maker Citadel Securities. Terra accused Citadel Securities of being involved in an alleged “concerted, intentional effort” to cause the depeg of its TerraUSD (UST) stablecoin in 2022.
With the SEC challenging the jury’s ruling and demanding summary judgment, the legal battle surrounding Terraform Labs and its alleged violations is far from over. The conflicting arguments made by the SEC, Do Kwon, and Terraform Labs raise questions about the nature of the assets in question and the responsibilities of the parties involved. The judge’s decision will have significant implications for both the individuals implicated and the broader cryptocurrency community.
Implications for the Cryptocurrency Market
The outcome of this case will likely have a lasting impact on the regulation and classification of various tokens within the cryptocurrency market. The SEC’s pursuit of Terraform Labs highlights their commitment to holding individuals and companies accountable for potential securities violations. The ruling will also serve as a precedent for future cases involving the issuance and sale of tokens, potentially setting guidelines and boundaries for the industry.
Closure and Clarity
As the legal proceedings continue and the SEC challenges the verdict reached by the jury, the clarity and closure this case offers remain uncertain. While the SEC aims to maintain the integrity of the crypto market, there is still much debate and disagreement over the classification and regulation of certain tokens. Only time will tell how this legal dispute unfolds and what impact it will have on the cryptocurrency industry as a whole.