Judge Backs SEC in Battle Against Do Kwon & Terraform Labs

The judge ruled that LUNA and UST are securities, and denied the requested summary judgment on fraud allegations.

Do Kwon in the target view, hes putting his hands up in midst of fire. Gary Gensler thinking what to do with him.
Created by Kornelija Poderskytė from DailyCoin
  • The Securities and Exchange Commission is pursuing bringing Terraform Labs Do Kwon to justice.
  • The SEC has scored a win in court.
  • The parties are slated for trial in the upcoming year.

The U.S. Securities and Exchange Commission (SEC) has been on a year-long pursuit of Terraform Labs and its founder, Do Kwon, following the collapse of the stablecoin UST. The commission made several allegations against the firm and Kwon, including manipulating Terra tokens and financial fraud. 

While the elusive maneuvers of the disgraced founder have posed a challenge to efforts to bring him to justice, the SEC has remained relentless, now scoring a win and edging a step closer.

Judge Rules UST and LUNA Securities

On December 28, U.S. Judge Jed Rakoff of the District Court for the Southern District of New York ruled in favor of the Securities and Exchange Commission (SEC) regarding allegations that Terraform Labs and its founder, Do Kwon, offered and sold unregistered securities. 

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The judge emphasized that “there is no genuine dispute that UST, LUNA, wLUNA, and MIR are securities because they are investment contracts,” underscoring that Terraform Labs, under the governance of Do Kwon, violated the U.S. Securities Act.

While the ruling represents a victory for the SEC, Judge Rakoff denied the requested summary judgment on the posed fraud allegations from both sides but scheduled a jury trial set to commence on January 29, 2024.

The SEC is not the only regulatory authority searching for accountability for the Terra Luna collapse.

Triple Trouble For Do Kwon

Earlier this year, South Korea, the United States, and Singapore initiated separate investigations into Terraform Labs and its founder, Do Kwon. 

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Each country sought to uncover the events leading to the de-pegging of Terra Luna’s stablecoin and bring the disgraced crypto mogul to justice for his alleged crimes.

However, the unanimous champion of hide seek pulled sneaky tactics and continued to evade authorities before being convicted in Montenegro on charges of document forgery.

A Montenegro judge signed a motion to extradite Kwon, deciding on the United States as the Terra Founder’s destination. The success was short-lived, however, as Kwon’s defense team filed an appeal that ultimately saw the decision overturned.

Do Kwon faces several allegations, including market law violations and the orchestration of a fraudulent scheme. He would serve a jail sentence of up to 40 years if convicted.

On the Flipside

Why This Matters

The judge’s ruling validates the SEC’s allegations against Terraform Labs and Do Kwon and adds a complex layer to his already delicate legal battle.

Read more about the Do Kwon-SEC battle:
SEC Targets Terra Co-Founder with LUNA, USTC Collapse Lawsuit 

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Grace Abidemi

Grace Abidemi, a cryptocurrency reporter at DailyCoin, covers industry developments and trends. She previously worked as a freelance writer. With a Bachelor's degree in German Language and certifications in marketing and storytelling, Grace creates engaging content. When not working, she's in Nigeria, mastering cooking and canvas painting, and enjoys learning about different cultures and languages.