SEC Requests Do Kwon’s Summary Judgement from Federal Judge

Kwon’s TerraForm Labs legal saga escalates: the Securities and Exchange Commission seeks a precedent-setting summary judgment.

Gary Gensler infront of a court house in a cloud of documents.
Created by Gabor Kovacs from DailyCoin
  • Do Kwon and Daniel Shin’s previous chat leak showed condemning evidence. 
  • Securities and Exchange Commission (SEC) appeal the jury’s decision.
  • TerraForm Labs sought to toss the SEC’s lawsuit on the same day.

The customer defrauding and market manipulation case of the infamous Terraform Labs has seen a major breakthrough. In the latest move by the Securities and Exchange Commission (SEC), an official summary judgment by a Federal Judge was requested, as the SEC does not agree with the leniency shown by the jury.

The SEC’s official statement suggests that Do Kwon, the mastermind behind the whole Terra Luna blockchain, had purposefully deceived investors by selling three tokens as securities: Terra (LUNA), Terra’s stablecoin (UST), and Mirror Protocol (MIR).

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Further on, the SEC alleged that: “No rational jury could conclude that Kwon was not liable for Terraform’s violations of Exchange Act Section 10(b) and Rule 10b-5 thereunder pursuant to Exchange Act Section 20(a).” Do Kwon controls 92% of TerraForm Labs shares, enough to “direct or cause the direction of the management and policies of Terra’s chain.”

Finally, the SEC pledged that the notorious founder himself admitted to having the ultimate authority for the decisions – this is evident in the recently leaked Slack chat history. In the controversial chat log provided by the SEC, Do Kwon openly boasts about being able to make the fake transactions “indiscernible,” wishing luck to anyone who could spot a difference.

TerraForm Labs Defense Makes Next Chess Move

The SEC’s request for a summarized judgment by a top-tier Federal Judge comes just a few days after Terraform Labs’ defense filed a motion to dismiss the case. According to the motion filed on October 27, 2023, the SEC has failed to provide sufficient evidence and lacks “credible first-hand knowledge” of the case.

Moreover, the 56-page complaint states that the “SEC has, through its factual allegations, asserted a plausible claim that the defendants’ crypto assets qualify as securities.” Indeed, TerraForm Labs’ defense claims that its tokens shall not be considered unregistered securities, using the favorable decision for XRP in the highly-publicized SEC vs. Ripple case, as well as the Howey Test, as the main argument.

On the Flipside

  • While the SEC is attempting to prosecute Do Kwon on multiple fraud and market manipulation charges, it’s unclear whether Kwon will be extradited to the United States.
  • Other contenders to lead the Terra Luna fiasco case are Do Kwon’s native South Korean legal authorities, as well as a dedicated Singaporean police unit.

Why This Matters

The outcome of this lawsuit is paramount for the disturbed investors affected by the Terra Luna depegging in May 2022.

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Author
Tadas Klimasevskis

Tadas Klimaševskis is a Lithuanian journalist at DailyCoin, specializing in covering the lighter side of the crypto industry such as memecoins and pop culture in the metaverse. He has experience as a music artist, English language teacher, and freelance writer, and uses his creative writing skills to summarize valuable information in his work. He is also a strong believer in the potential of blockchain and spends his free time listening to music, traveling, and watching basketball games.